Buy Godrej Consumer; target of Rs 1180: Edelweiss Securities

Edelweiss Securities is bullish on Godrej Consumer has recommended buy rating on the stock with a target price of Rs 1180 in its research report dated December 16, 2021.

“India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business,” JM Financial research report.

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Edelweiss Securities’ report on Godrej Consumer

The Godrej Consumer (GCPL) stock has corrected about 17% from its peak. We had earlier highlighted GCPL would have a weak Q2FY22 performance in India HI, Indonesia and margins. However we believe most of these issues are transitory. GCPL will benefit from: i) recovery in demand for personal care led by rising mobility; ii) rising dengue cases, which could drive HI business, but watch out for a harsh winter; and iii) strong performance in the Africa business while corrective actions in Indonesia (aided by soft base) should also help.

Outlook

We continue to be positive on the impact of the new MD & CEO, Mr. Sudhir Sitapati. Maintain ‘BUY’ with a TP of INR1,180.

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