Godrej Consumer share price falls over 2% after Q1 business update; Should you buy the stock?

Godrej Consumer Products share price declined over 2% on Tuesday after the company reported its business update for the first quarter of FY25. Godrej Consumer shares fell as much as to ₹apiece on the BSE.

Despite the operating conditions in India continuing to remain soft in the April-June 2024 quarter, Godrej Consumer Products said its India business performed well with high-single digit organic volume and mid-single digit value growth.

“Reported growth will be double-digit in volume and high-single digit in value terms. The growth was broad-based across both Home Care and Personal Care,” the company said in a regulatory filing.

Indonesia business delivered high-single digit volume growth and double-digit constant currency sales growth. However, the Indonesian currency has seen high depreciation leading to lower growth in INR terms, it added.

The FMCG company expects its GAUM (Godrej Africa, USA, and Middle East) organic business to see double-digit volume decline largely led by West Africa due to a high base in Q1 FY24 on account of appointment of a National Distributor giving a one-time sell-in benefit and some tough pricing decisions in Nigeria.

“There has been an additional impact driven by supply disruption in South Africa led by the shipping crisis. As shared earlier, the currency in Nigeria continues to negatively impact our INR sales performance. Despite this, we have grown EBITDA (reported) in INR terms in strong double-digit,” Godrej Consumer said.

At a consolidated level (organic), it expects flattish INR sales, double-digit constant currency sales growth and double-digit EBITDA (reported) growth.

According to Nuvama Institutional Equities, Godrej Consumer’s overall business update was inline with its expectations. The brokerage expects India volume growth (organic) to be 8% YoY (5% value growth); reported volume growth shall be in double digits.

For the quarter ended June 2024, Nuvama expects Godrej Consumer Product’s consolidated sales and EBITDA to grow 2.1% and 12% YoY. Domestic volumes (organic) are likely to inch up 8% YoY and it expects overall gross margin and EBITDA margin to expand 196 bps and 193 bps YoY.

The brokerage firm maintained a ‘Buy’ rating on Godrej Consumer shares with a target price of ₹1,510 per share.

Godrej Consumer shares have remained flat in one month, but have seen a decent rally of 24% year-to-date (YTD).

At 10:00 am, Godrej Consumer shares were trading 1.88% lower at ₹1,399.05 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.