Godrej Cons in focus: Shares of Godrej Consumer Products fell as much as 4.53 per cent to hit an intraday low of Rs 1,433 per share on Thursday, August 8, 2024.
The fall in the stock price came after the company’s June quarter (Q1FY25) numbers missed the street estimates.
The company posted a profit rose 41.4 per cent year-on-year (Y-oY) to Rs 450.7 crore in the June quarter of FY25, from Rs 318.8 crore in the June quarter of FY24.
It revenue, however, fell 3,.4 per cent annually to Rs 3,331.6 crore in the June quarter if FY25, from Rs 3,448.9 crore in the June quarter of FY24.
At the operating level, Godrej Cons earnings before interest, tax, depreciation and amortisation (Ebitda) rose 12.7 per cent Y-o-Y to Rs 724.4 crore in Q1FY25, from Rs 642.8 crore in Q1FY24.
Consequently, Ebitda margin expanded 310 basis points (bps) to 21.7 per cent in Q1FY25, from 18.6 per cent in Q1FY24.
The board of directors also declared an interim dividend of Rs 5 per share for the financial year 2024-25. The record date for the dividend is Friday, August 16, 2024. The dividend will be paid on or before Friday, September 6, 2024, it said.
Entry in a new segment.
The company is expanding into the pet care sector with the launch of Godrej Pet Care (GPC), a new subsidiary of GCPL. The pet care market in India is valued at approximately Rs 5,000 crore and is expected to experience strong double-digit growth over the coming decades.
GCPL plans to invest Rs 500 crore in GPC over the next five years. Godrej Agrovet (GAVL) will serve as the manufacturing and research and development (R&D) partner for this venture.
Currently, only about 10 per cent of Indians own pets, and of those, just 10 per cent feed them packaged food, and even then, only 40 per cent of the time. In comparison, calorie conversion for pet food in India stands at just 4 per cent. In contrast, China, which was comparable to India 15 years ago, now has 20 per cent pet ownership with a calorie conversion rate of 25 per cent.
“Today, we are announcing the formation of Godrej Pet Care (GPC), a subsidiary of GCPL. Pet foods is already a Rs 5,000 crore category with many decades of late teens growth ahead. While the opportunity is clear, we believe that our right to win as a group is high. GAVL, our group company, is the market leader in animal feed and has a good understanding of pet foods R&D, with competitive advantages in the supply chain. GCPL will invest the entire capital of Rs 500 crore in GPC over a period of 5 years, post which we see GPC becoming cash flow positive. GAVL will be our manufacturing and R&D partner. Lead times to set up capex are long, and we hope to commence manufacturing in the second half of next year,” said Sudhir Sitapati, managing director and CEO of Godrej Consumer.
Segment-wise show
In India, organic volume increased 8 per cent, and reported volume grew by 10 per cent, leading to a 9 per cent year-on-year rise in reported sales.
Indonesia saw a 7 per cent growth in volumes and an 11 per cent increase in sales in constant currency terms compared to the previous year.
However, sales in Africa, the USA, and the Middle East declined 25 per cent in Rupee terms and 10 per cent in constant currency (CC) terms year-on-year.
Conversely, Latin America and SAARC experienced a 7 per cent sales growth in Rupee terms and a 147 per cent increase in constant currency (CC) terms year-on-year.
Outlook
The company said that it remains focused on driving volume-led growth along with healthy investments in our brands and improvement in profitability.
“We continue to have a strong balance sheet. We are on track in our journey to reduce wasted cost and are deploying this to drive profitable and sustainable volume growth across our portfolio through category development,” added Sitapati.
At 11:18 AM, shares of the company were trading 3.37 per cent lower at Rs 1,450.50 per share. In comparison, BSE Sensex was trading 0.42 per cent lower at 79,131.83 levels.
First Published: Aug 08 2024 | 11:29 AM IST
