Nomura Financial Advisory and Securities has upgraded Godrej Consumer Products (GCPL) to 'Buy' from 'Neutral' with target price of Rs 845 as against current markets price (CMP) of Rs 727 with 16% potential upside in its report.

Commenting on the investment rationale, Nomura said, ''International business margins have been under pressure over the past few quarters although they have been impacted by several one-off issues across geographies. While there are some signs of recovery already, a return to normalized level of margins will come through in early FY15F, in our view. The stock has corrected by 15% YTD on the back of slowing demand in India and depressed international business margins.

However, we believe a turnaround in both will come through in early FY15F. Valuations are also supportive at 20.5x FY16F (EPS: Rs 35.5).We are upgrading GCPL to Buy with a target price of Rs 845, implying 16% potential upside from current levels. 

GCPL trades at 20.5x FY16F (EPS: Rs 35.5) vs. the sector average of 23.4x, Dabur's 22.6x and Colgate Palmolive's 24x. We believe GCPL offers much better value within the mid cap consumer space as compared to peers at these levels. We upgrade the stock to Buy from Neutral and our revised target price of Rs 845 implies 16% potential upside from current levels.''

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