Update on the Indian Equity Market
On Thursday, NIFTY closed 79 points lower to 11,234 reversing Wednesday gains. Result season began today with TCS and IndusInd bank. Market movements will be influenced by quarterly financial performances. Amongst the NSE 50, top gainers were BHARTIARTL (+4.4%), GRASIM (+3.7%), RELIANCE (+2.7%) while INDUSINDBK (-6.0%), YESBANK (-5.4%) dragged index down. In the sectoral indices, Pharma remained stable; while all others saw a decline. Banks (-2.7%), Realty (-2.1%), Financial Services (-1.9%) were the biggest losers.
Godrej Consumer Products: On track for a gradual recovery in volume growth
Key takeaways from the interview of Mr Vivek Gambhir, MD & CEO, Godrej Consumer Products Limited (GODREJCP); dated 9th October 2019 with CNBC TV18:
- GODREJCP expects to deliver higher single-digit volume growth in 2HFY20 if the recovery sustains. There is a Month on Month (MoM) volume growth since July 2019. The demand in 2QFY20 was stable Quarter on Quarter (QoQ).
- GODREJCP has been launching new products in the insecticides segment. It expects to turnaround this segment on the back of new innovations.
- In the soaps segment; GODREJCP has maintained the price levels in the competitive pricing environment.
- Margins are volume-driven. The company is positive on maintaining margins as long as the volume growth sustains.
- GODREJCP enjoys a strong market position of the ‘Ezee’ and ‘Genteel’ brands in the liquid detergents segment. It intends to capitalize on the market leadership and scale up the presence in the liquid detergents and specialist laundry solutions over the next few years.
Consensus Estimate (Source: market screener website)
- The closing price of GODREJCP was ₹ 680/- as of 10-October-19. It traded at 43x/ 36x/ 33x the consensus EPS for FY 20E/ FY 21E/ FY 22E of ₹ 16.0/ 18.7/ 20.9 respectively.
- Consensus target price of ₹ 688/- implies a PE multiple of 33x on FY22E EPS of ₹ 20.9/-