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godrej buyer share price: Incorporate Godrej Buyer Products and solutions, target price Rs 700: ICICI Securities

ICICI Securities has given an add rating to Godrej Client Products and solutions Ltd (GCPL) with a concentrate on price of Rs 700. The share price moved up by 1.01 for every cent from its past close of Rs 661.70. The stock’s very last traded price is Rs 668.40.
For the brokerage, GCPL stays an outperformer in staples. It sees potential turnaround in India House Insecticides (22 per cent of revenue, 45 per cent of SoTP valuation) pushed by (1) regaining lost ground from illicit incense sticks (problems in sourcing, weakness in wholesale), (2) acceleration in class progress (larger use provided customer focus on health and fitness), (3) continued weak spot in competitors and (4) new product launches.
The brokerage also expects margin positive aspects from blend enhancement (India Household Insecticides is margin accretive) and deflationary enter prices. Africa organization has a high exposure to shopper discretionary classes and results could be binary. That stated, Residence Insecticides in Africa, even though a extended-gestation, could reward from a administration change.

Investment Rationale
The brokerage expects all round market growth from greater usage by individuals becoming wary of contracting mosquito borne diseases (malaria, dengue). Aggressive intensity could also continue being low supplied Reckitt Benckiser (next largest participant in India Home Insecticides with Mortein brand name) rolling again the break up of its organizations in 2019. The brokerage expects a host of new merchandise launches by GCPL in Domestic Insecticides to gain market share.
The brokerage has amplified its earnings estimates by 8-9 for every cent modelling revenue / EBITDA / PAT CAGR of 6 per cent / 10 per cent / 8 for every cent about FY20-22E. It maintains include raing with a SoTP-primarily based revised focus on price of Rs 700 (Rs 600 earlier). At our focus on price, the inventory will trade at 39 situations P/E various March-22E.
Essential downside risk is sustained weak spot in Africa.
Supply: ICICI Securities
For the quarter ended March 31, 2020, the firm noted consolidated sales of Rs 2132.69 crore, down -22.59 for every cent from previous quarter sales of Rs 2755.08 crore and down -12.22 per cent from final year’s same quarter sales of Rs 2429.68 crore. The organization noted net profit following tax of Rs 230.11 crore in the hottest quarter.
Promoter/FII Holdings
Promoters held 63.24 for every cent stake in the firm as of March 31, 2020, although FIIs held 26.34 per cent, DIIs 3.1 per cent and community and many others 7.32 for each cent.


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