Godrej Consumer Products shares rise as Street cheers strong Q2 show by FMCG major; what should investors do?

Godrej Consumer Products (GODREJCP) shares were in demand on Thursday after the Mumbai-based FMCG major reported a strong set of financial results for the September quarter (Q2 FY24).

Godrej Consumer Products reported its Q2 earnings post-market hours on November 1. | Image: godrejcp.com

Godrej Consumer Products (GODREJCP) shares rose on Thursday after the Mumbai-based FMCG major—whose popular brands include Cinthol, Good Knight and Ezee—reported a strong set of financial results for the July-September period driven by 10 per cent year-on-year growth in volumes. Godrej Consumer Products shares gained by as much as Rs 32.4, or 3.3 per cent, to Rs 1,007 apiece on BSE, coming within Rs 95 of a 52-week high scaled in July.

After market hours on Wednesday, Godrej Consumer Products (GODREJCP) reported a 20.6 per cent year-on-year jump in consoldiated net profit to Rs 432.8 crore with revenue growth of 6.2 per cent to Rs 3,602 crore for the second quarter of the current financial year, both exceeding analysts' estimates.

Its earnings before interest, taxes, depreciation and amortisation (EBITDA) increased 29.9 per cent to Rs 704 crore, and margin improved by 350 basis points (bps) to 19.5 per cent.

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The FMCG company beat Street forecasts on all fronts.

According to Zee Business research, Godrej Consumer Products' quarterly net profit was estimated at Rs 434 crore, revenue at Rs 3,573 crore, EBITDA at Rs 676 crore, and margin at 18.9 per cent.

The company said its consolidated sales grew 16 per cent on year in constant currency terms. Sales at its India business sales grew nine per cent, led by an 11 per cent increase in volumes.

Godrej Consumer Products dividend

The Godrej Consumer Products board announced a dividend of Rs 5 per share with a record date of November 9. Read more on Godrej Consumer Products dividend

EDITOR'S TAKE | Best results in FMCG space

Zee Business Managing Editor Anil Singhvi pointed out that Godrej Consumer Products' results were the best in the FMCG sector with strong margins.

He suggests buying Godrej Consumer Products futures for targets of Rs 988, Rs 999 and Rs 1,010 with a stop loss at Rs 962.

The market wizard also said that the FMCG company's management is confident of future growth.

What analysts say about Godrej Consumer Products after the FMCG major's Q2 earnings

Most brokerages maintained positive views on Godrej Consumer Products after the Mumbai-headquartered company's earnings announcement.

According to HSBC, which retained a 'buy' call on Godrej Consumer Products but brought down its price target for the FMCG stock by Rs 30 to Rs 1,220, the company's standalone volume growth and its modest decline in personal care paint a weaker picture.

The brokerage's target still implies an upside of more than 25 per cent in Godrej Consumer Products shares from the previous close.

Brokerage	Rating	Price target	Upside/downside vs Wednesday's close
CLSA	Sell	Rs 930	-4.6%
Morgan Stanley	Overweight	Rs 1,072	10%
JPMorgan	Overweight	Rs 1,135	16.5%
Jefferies	Buy	Rs 1,200	23.1%
HSBC	Buy	Reduced to Rs 1,220 from Rs 1,250	25.2%
Macquarie	Neutral	Rs 1,085	11.3%

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