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Godrej Consumer: Acquisitions Drive Top Line Growth - Views on News from Equitymaster
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  • Oct 20, 2016 - Godrej Consumer: Acquisitions Drive Top Line Growth

Godrej Consumer: Acquisitions Drive Top Line Growth
Oct 20, 2016

Godrej Consumer Products (GCPL) declared results for the quarter and year ended June 2016. The company's consolidated revenues were up by 6.8% YoY during the quarter, while profits grew by 109.2% YoY. Here is our analysis of the results:

Performance summary
  • GCPL reported a revenue growth of 6.8% YoY. Growth during the quarter was led by the company's international business which grew by about 14% YoY (18% YoY in constant currency terms). However, excluding acquisitions, total net sales grew by just 1% YoY (3% in constant currency basis). India business sales was flat, impacted by a stretched summer and the late onset of monsoon, resulting in a weak performance in Household Insecticides (This segment contributes about half of the domestic business). Excluding household insecticide, sales from other segments was up by 7% YoY. On the international front, Africa business witnessed strong growth of 52% YoY (on constant currency), while the growth in other geographies like Indonesia, Latin America and Europe was lukewarm.
  • In spite of flattish growth on the topline for India business, EBITDA profits for the domestic business grew by 14% YoY, while EBITDA profits grew by 29% YoY in the international business. This led to margin improvement, of 200 bps for the quarter.
  • Net profits up by 109.2% YoY during the quarter. However, this was due to higher exceptional losses in 1QFY16. Excluding exceptional item, net profits were up by around 17% YOY.
  • The board has declared an interim dividend of 100% (INR 1.00 per share), during the 1QFY17.

    Consolidated Financial Snapshot
    (Rs m) 1QFY16 1QFY17 Change
    Net sales 19,879 21,228 6.8%
    Expenditure 16,723 17,428 4.2%
    Operating profit (EBIDTA) 3,157 3,800 20.4%
    EBDITA margin (%) 15.9% 17.9%
    Other income 193 141 -27.0%
    Depreciation 230 327 42.1%
    Interest cost 326 329 0.9%
    Forex gains/ (losses) 16 9 -40.8%
    Exceptional items -998 -95
    Profit before tax 1,811 3,199 76.7%
    Tax 636 754 18.5%
    Effective tax rate 35% 24%
    Profit after tax/(loss) 1,175 2,446 108.1%
    Minority interest/ share in profit of associates -8 -4
    Net profit after tax 1,167 2,442 16.8%
    Net profit margin (%) 12.70% 13.70%
    No. of shares (m) 341
    Diluted earnings per share (Rs)* 34
    Price to earnings ratio (x) 40

    *On a trailing 12-month basis; adjusted for extraordinary items

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