Emkay Global Financial Services has downgraded Godrej Consumer Products to 'Accumulate' after the company declared its first quarter results. The stock broker fixed price target at Rs 1,360.
Commenting on the results, Emkay Global Financial Services said, "Consolidated revenues at Rs 20.9bn, up 11% yoy, EBITDA margin up 220bps yoy to 15% and APAT at Rs 2.1bn, up 34% yoy. Domestic volumes strong at 13% led by soaps & Household insecticide. Healthy constant currency growth in international at 13% (LATAM & Africa) muted by currency devaluation."
Commenting on the investment rationale, Emkay Global Financial Services said, ''Cost initiatives and benign inputs aid gross margin expansion of 380bps, but higher employee cost muted margins to 15%, +220bps. Cost efforts (Project Pie & Iceberg) along with lower inputs & mix are key margin levers. While, growth prospects are strong with likely uptick in urban demand and improving international operations, but given recent stock outperformance leaves little scope for upside. We downgrade stock to Accumulate with revised target price of Rs 1,360.''
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