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Godrej Consumer Products: Volume woes! - Views on News from Equitymaster
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Godrej Consumer Products: Volume woes!
Nov 29, 2016

Godrej Consumer Products has announced its financial results for the second quarter of the financial year 2016-17 (2QFY17).0020Revenue grew by 11.4% YoY and adjusted net profits were up 12.4% YoY.

Performance summary
  • For 2QFY17, the revenue increased by 11.4% YoY. However, the organic growth was subdued at 3% YoY.
  • The subdued offtake in soaps (down 10% YoY), exports (down 3% YoY) and hair colour (flat YoY) business exerted pressure on topline. The Household Insecticides business grew by 18% YoY.
  • The volumes increased by 9% YoY on the back of 7% YoY growth in the India business.
  • Operating profits were up by 14% YoY, with margins expanding by 40 bps to 19.7%. The company was able to contain the increase in the raw material cost (up 8.6% YoY) and advertisement spending (up 21.4% YoY) due to decline in employee cost and other expenses.
  • Adjusted net profits were up by 12.4% YoY. The increase in net profits was roughly in line with increase in topline.
  • For 2HFY17, revenues grew by 9.2% YoY and adjusted net profits were up by 19.9% YoY.
  • The board has declared an interim dividend for the second time of 100% INR 1.00 per share.

    Consolidated Financial Performance Snapshot

    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Net sales 21,191 23,602 11.4% 41,071 44,830 9.2%
    Expenditure 17,094.10 18,944.00 10.8% 33,817 36,372 7.6%
    Operating profit (EBDITA) 4,097 4,658 13.7% 7,254 8,458 16.6%
    EBDITA margin (%) 19.3% 19.7% 40.27 17.7% 18.9% 120.60
    Other income 201 168 -16.6% 410 318 -22.6%
    Depreciation 235 358 52.3% 465 684 47.2%
    Interest 313 350 11.8% 642 676 5.3%
    Profit before tax 3,750 4,118 9.8% 6,557 7,416 13.1%
    Exchange Profit/Loss 0 0 0 0
    Exceptional item -775 -5 -1,810.70 -100
    Tax 757 907 19.8% 1,393.00 1,660.70 19.2%
    Profit after tax / (loss) 2,218 3,207 44.6% 3,354 5,656 68.6%
    Minority Interest -4 -26 -3 -36
    Adjusted Net Profit 2,833 3,185 12.4% 4,780 5,733 19.9%
    Net profit margin (%) 13.4% 13.5% 12.54 8.2% 12.6%
    No. of shares (m) 340.6
    Diluted earnings per share (Rs)* 35.1
    Price to earnings ratio (x)* 40.66

    *trailing twelve-month earnings

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