Stock to BUY: Amid volatility in the domestic stock market, brokerage houses are keeping an eye on many stocks. One stock of the FMCG sector continues to be in focus.
Godrej Consumer Products Ltd (NSE: GODREJCP) gave third-quarter updates this month, but the stock fell due to slightly weak guidance. However, brokerages are still bullish on the stock.
A Foreign Brokerage Firm On Godrej Consumer
The foreign brokerage firm has given an overweight opinion on Godrej Consumer Products Ltd. The foreign brokerage firm has maintained an overweight rating on Godrej Consumer Products Limited (GCPL) and set its target price at ₹1365, which is a 22% upside target of the previous closing price of ₹1,111.
The stock was trading at Rs 1,1180 today on Monday. The firm expects the volume growth of GCPL’s soap segment to normalize in the next two quarters.
Volume Growth And Pricing Pressure
The 85-90% slowdown in Godrej Consumer Products Ltd’s volume growth is being considered a cyclical factor. The company had recorded a 7% volume growth in Q2FY25.
However, the recent rise in palm oil prices by 20-30% has led to an increase in the cost of the soap segment, which is directly affecting the margins.
To reduce inflationary pressure, the company increased the prices of its products in December 2024. Performance may be affected due to seasonal effects in Q4FY25, but recovery is expected in H1FY26.
Quick Fact
| Company name | Godrej Consumer Products |
|---|---|
| Stock price | ₹1,112 |
| Opening price | ₹1,120 |
| Sector | FMCG |
| Q2FY25 volume growth | 7% |
| Soap segment slowdown | 85-90% |
| Soap segment cost rise | Palm oil price up 20-30% |
| Price increase | December 2024 |
| Expected recovery time | H1FY26 |
| Possible target price | ₹1365 (22% up) |
| Foreign brokerage rating | Overweight |
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