Godrej Consumer Products Share Rally Over 24%; Brokerages Upbeat On The Scrip

Shares of Godrej Consumer Products rallied over 24 percent in intra-day trade on May 12, 2021 to hit its 52-week high price of Rs. 892 per share on the NSE. The sharp surge in share price of the FMCG major comes after its stellar Q4FY21 results and announcement of CEO succession plan.

Godrej Consumer Products Share Rally Over 24%; Brokerages Upbeat On The Scrip

Godrej Consumer March quarter FY21 earnings

For the March ended quarter, the company reported a 59% jump in its consolidated net profit at Rs. 365.84 crore. In the same period a year ago, the company reported a net profit of Rs. 229.90 crore. Net sales of the company during the quarter went higher by 26.87 percent to 2,705.69 crore against Rs 2,132.69 crore in the year-ago period.

Total expense at the company also grew 26.07 percent year on year to Rs. 2,259.12 crore as against Rs 1,791.93 crore in the year-ago period. Revenue at the firm also increased year-on-year to Rs. 1499.74 crore, a 34.6 percent increase as against Rs 1,113.94 crore in the year-ago quarter.

Godrej consumer announces CEO succession plan

Also, the company announced the appointment of Mr. Sudhir Sitapati as Managing Director & CEO. The Board of Directors at its meeting held today, appointed Mr. Sudhir Sitapati as the Managing Director & CEO of the Company for a period of five years with effect from October 18, 2021, subject to the approval of the shareholders in the ensuing Annual General Meeting. Accordingly, with effect from that date, Ms. Nisaba Godrej, who is currently the Chairperson & Managing Director, will serve as Executive Chairperson, said the company in a BSE Filing.

After the Q4FY21 results, brokerages are upbeat on the counter of Godrej Consumer Products. Here are the brokerages' view and target price for the stock:

1. Credit Suisse | Rating: Outperform | Target: Rs 875

Sitapati's appointment is a major medium-term positive and the company is in an important phase of expansion into new categories and would gain immensely from a strong CEO. The FMCG firm is set to become a broad-based home and personal care company over the next four to five years, says the global brokerage house.

2. Motilal Oswal | Rating: Buy| Target: Rs 870

Motilal Oswal has given a 'Buy' on the stock of Godrej Consumer after being neutral for over 10 years.It is admittedly an early call, but if its businesses start to perform and there is further rationality in capital allocation, there could be significant gains for investors, with a significant re-rating as well. We upgrade the stock to buy with a target of Rs 870 (40x FY23E EPS instead of 35x earlier), said the brokerage.

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