Last Updated:
Godrej Consumer Products anticipates gross sales development in digit for Q3 whereas stating that demand circumstances within the financial system have been ‘subdued’ for the previous few months
Godrej Consumer shares tank 11%
Shares of Godrej Consumer Products Ltd. (GCPL) dropped by as much as 11% on Monday, hitting a low of Rs 1,104.20 on the BSE. The firm shared a cautious Q3 enterprise outlook, which prompted brokerages to decrease their goal costs.
The decline within the inventory value got here after GCPL indicated that it expects demand and margin challenges within the close to time period. The firm forecasted “flattish” underlying quantity development (UVG) and mid-single-digit gross sales development for Q3 FY25. Additionally, it anticipated a short lived dip in EBITDA margins for the quarter. The firm additionally cited unfavorable climate circumstances, resembling delayed winters within the North and a cyclone within the South, which impacted the efficiency of its Home Insecticides (HI) section, accounting for a 3rd of its standalone enterprise.
GCPL famous that demand circumstances within the home market have been weak over the previous few months however reassured buyers that the margin strain can be non permanent. The firm emphasised that its broader enterprise stays sturdy, significantly in worldwide markets, the place its strategic targets proceed to be met. The firm additionally highlighted that Godrej Africa, USA, and the Middle East (GAUM) are anticipated to keep up wholesome EBITDA margins for the fourth consecutive quarter.
In response to the replace, home brokerage Emkay Global downgraded GCPL to “Reduce” from “Add” and revised its goal value to Rs 1,225. The agency lower earnings forecasts by 4-7%, citing demand and inflationary pressures. Emkay expects India EBITDA to say no by excessive teenagers in Q3 resulting from a excessive base and uncooked materials challenges, with low-single-digit income development and a low-double-digit decline in EBITDA.
CLSA additionally downgraded the inventory to “Underperform,” setting a decrease goal value of Rs 1,000, pushed by considerations over Q3 FY25 gross sales and EBITDA efficiency. The agency highlighted seasonal volatility within the Home Insecticides section, regardless of new product launches, and warned that margins are more likely to fall under the conventional vary.
On the opposite hand, UBS and Jefferies have maintained their “Buy” scores, setting goal costs of Rs 1,450 and Rs 1,550, respectively. JPMorgan additionally maintained an “Overweight” ranking with a goal value of Rs 1,410. Macquarie, whereas protecting a “Neutral” stance, lowered its goal value to Rs 1,260 from Rs 1,300.
As of September 2024, promoters maintain a 63% stake in Godrej Consumer Products.
