Godrej Consumer Products - Investment Rationale Intact: Motilal Oswal
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Motilal Oswal Report
After maintaining a neutral view on Godrej Consumer Products Ltd. for 10 years, we turned bullish on its prospects earlier this year. Our positive view on the investment case is bolstered by the strong revival in the domestic topline seen over the last 21 months (after a lackluster second half in the previous decade).
The healthy double-digit domestic sales growth in nine months-FY22 (on a double-digit base in FY21) was particularly encouraging. Godrej Consumer’s balance sheet also continued to strengthen in H1 FY22, with return on capital employed exceeding 20%.
As emphasised in our earlier note, Mr Sudhir Sitapati’s medium-term focus would be on driving double-digit volume led growth primarily via penetration gains. The other levers are market share gains, consumption-led market growth, and disruptive innovation.
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