Firstcall Research has recommended 'Buy' on Godrej Consumer Products (GCPL) with target price of Rs 1,220 as against current market price of Rs 1,108 in its report.
Commenting on the investment rationale, the broking firm said, "With four consecutive quarters of improvement in growth rates in the Indian FMCG sector, GCPL is seeing a gradual improvement in demand. The company remains optimistic that as the economy gathers pace in FY16, FMCG growth in FY16 will be better than that in FY15. While the macro-economic environment in some of its international markets remains challenging, GCPL confident of continuing to grow ahead of the market and improve its market share. Overall, company will strive to deliver a stronger operating performance in the fiscal year 2016. The medium and long-term growth prospects in India and GCPL other emerging markets remain robust. With the company clear strategic focus, differentiated product portfolio, superior execution and top-notch team, GCPL will continue to deliver industry-leading results in the future.
At the current market price of Rs.1,108.40, the stock P/E ratio is at 35.80 x FY16E and 32.88 x FY17E respectively. Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.30.96 and Rs.33.71 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 9% and 14% over 2014 to 2017E respectively. On the basis of EV/EBITDA, the stock trades at 23.81 x for FY16E and 22.18 x for FY17E. Price to Book Value of the stock is expected to be at 7.24 x and 6.30 x for FY16E and FY17E respectively. We recommend 'BUY' in this particular scrip with a target price of Rs.1,220 for medium to long term investment."
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