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Godrej Cons: Margins remain depressed
Jan 23, 2012

Godrej Consumer Products Ltd. has announced its third quarter results of financial year 2011-2012. The company has reported a 20% YoY growth in sales and 13.7% YoY rise in net profit. Here is our analysis of the results.

Performance summary
  • In 3QFY12, Godrej Consumer Products (GCPL) recorded a 20% YoY growth in sales led by over 29% YoY jump in revenues of both household insecticides and soap segments. The hair colour segment sales saw a relatively muted increase of 9% during the quarter. During 9mFY12, the company's topline grew by 21.3% YoY.
  • Backed by cut in advertisement & promotion expenses and controlled rise in staff costs, the company has managed to offset higher input costs and other expenditure and maintain its EBITDA margin at 20.5%. For 9mFY12, operating margin fell by 180 basis points to 18.8% due to a steep rise in cost of goods sold.
  • The company's bottomline increased by a relatively slower 13.7% YoY due to a steep 173% YoY jump in interest cost and foreign exchange loss of 75 m incurred during the quarter as compared to exchange gain of 4.8 m in the year-ago quarter. However for 9mFY12, the net profit has grown by a sharp 37.4% aided by one-time compensation of Rs 1.56 bn for surrendering the Kiwi manufacturing and distribution license.

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