Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Godrej Consumer: On the right track - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Aug 9, 2001

    Godrej Consumer: On the right track

    Godrej Consumer Products, the demerged FMCG business of erstwhile Godrej Soaps, recently declared its first ever quarterly results. The company posted a net profit of Rs 92 m on sales of Rs 1,404 m during the quarter. The turnover is up 35% compared to first quarter of last year.

    (Rs m) 1QFY02
    Net Sales 1,404
    Other Income 27
    Expenditure 1,255
    Operating Profit (EBDIT) 149
    Operating Profit Margin (%) 10.6%
    Interest (net) 15
    Depreciation 23
    Profit before Tax 138
    Tax (including deffered tax) 46
    Profit after Tax 92
    Net profit margin (%) 6.5%
    Effective tax rate (%) 33.6%
    No. of Shares (eoy) (m) 59.8
    Diluted earnings per share* 6.1
    P/E ratio 7.9
    (* annualised)  

    Most of the segments in which Godrej Consumer operates in have shown a good growth. A huge 55% growth (value terms) in toileteries has come largely because of good response to 'Fairglow' range of products. Contract manufacturing has also shown a good growth this quarter. However, the management has indicated that this trend in contract manufacturing may not continue in the coming quarters.
    (Rs m) 1QFY01 1QFY02 Change
    Soaps 540 664 23.0%
    Hair colour 219 279 27.4%
    Toileteries 66 103 56.1%
    Detergents 8 3 -58.0%
    Total Godrej Brands 833 1,049 26.0%
    Contract manfacturing 206 355 72.3%
    Total Sales 1,039 1,404 35.2%

    The management looks more focused on its FMCG business than in the past. The company's relaunch of its brand 'Godrej No. 1' has resulted in a 318% growth in volume sales during 1QFY02. The company is re-launching its key brand 'Cinthol' soon.

    On the financial side, the company has repaid Rs 344 m of its debt during the quarter. Its debt stands reduced to Rs 351 m currently. Godrej Consumer is now operating on a negative working capital and the management looks keen to maintain this.
    Cost break-up
    (Rs m) 1QFY02 % of sales
    Material 651 46.4%
    Excise duty 161 11.5%
    Staff 45 3.2%
    Advertising & promotion 204 14.5%
    Others 194 13.8%

    Currently, Godrej has a 5.9% market share in toilet soaps. This share has not varied much over the last few years. However, it has cornered a 3.6% share of the fairness cream segment, thanks to 'Fairglow'. The company has increased its market share in the Hair Colour segment to 44.5% this quarter. Its share was 41.8% in the corresponding quarter last year.

    The first quarter performance of the company is encouraging and going by the management's commitment to this business, the future looks good, especially in the toiletries and the hair colour segment.

    At the current price of Rs 48 the stock trades at a P/e multiple of 7.9 times its 1QFY02 annualised earnings. These valuations are among the lowest in the FMCG circle. Probably, the management's past performance continues to cast a shadow on the valuations. However, if the company can maintain this growth momentum and its focus, valuations would definitely see an upswing.



    Equitymaster requests your view! Post a comment on "Godrej Consumer: On the right track". Click here!


    More Views on News

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 21, 2017 (Close)


    • Track your investment in GODREJ CONSUMER with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks



    Compare Company With Charts