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Godrej Consumer: Margin pressure - Views on News from Equitymaster

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Godrej Consumer: Margin pressure
Jan 24, 2008

Performance summary
  • Consolidated topline grows by 26% YoY for 3QFY09 and 27% YoY during 9mFY09.
  • Operating margins decline by 6.7% YoY and 5.6% YoY respectively for both the period under consideration on account of higher raw material costs.
  • Consolidated bottomline declines by 7% YoY during 3QFY09 and 4% YoY during 9mFY09 mainly due to lower margins and higher tax expense.


Consolidated picture
(Rs m) 3QFY08 3QFY09 (%) Change 9mFY08 9mFY09 (%) Change
Gross sales 2,756 3,555 29.0% 8,539 10,860 27.2%
less: excise duty 29 133 358.6% 208 358 71.9%
Net sales 2,727 3,422 25.5% 8,331 10,541 26.5%
Expenditure 2,158 2,938 36.2% 6,752 9,129 35.2%
Operating profit (EBDITA) 569 4843 -14.9% 1,579 1,413 -10.5%
EBDITA margin (%) 20.9% 14.1% 19.0% 13.4%
Other income 15 15 -0.7% 41 43 5.4%
Interest 29 (42) -243.4% 95 (100) -205.6%
Depreciation 48 51 5.8% 138 152 10.1%
Profit before tax 507 490 -3.4% 1,387 1,404 1.2%
Tax 76 88 16.2% 201 265 31.8%
Profit after tax/(loss) 431 401 -6.9% 1,186 1,139 -3.9%
Net profit margin (%) 15.8% 11.7% 14.2% 10.8%
No. of shares (m) 225.8 258.1 225.8 258.1
Diluted earnings per share (Rs)* 6.0
Price to earnings ratio (x)* 21.9
* 12 month trailing

What to expect?
At the current price of Rs 131, the stock is trading at a price to earnings multiple of 15.2 times our estimated FY11 earnings. We shall update the result analysis post the conference call scheduled on Tuesday.

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