Buy Godrej Consumer Products target of Rs 865: Sharekhan
Sharekhan’s research report on Godrej Consumer Products
Increased temperature and excessive rains have led to a rise in dengue cases in India, which, along with the receding threat of illegal incense sticks, will help the household insecticides (HI) category post good growth in Q3FY2020 as against Q2 and Q1. Volume growth in the soaps category is likely to sustain, driven by consumer offers. The international business is expected to perform well, driven by good growth in Indonesia, whereas margin expansion is expected to sustain in Africa due to cost-saving programmes. The current valuation of 33.6x FY2021 earnings and 28.7x FY2022 earnings is reasonable compared with sector P/E.
Hence, we maintain our Buy recommendation on the stock with an unchanged PT of Rs. 865.
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