Share of FMCG company Godrej Consumer Products (NSE: GODREJCP) fell by about 11 percent in early trade on 9 December. The company has projected flat growth in the October-December 2024 quarter.
It has also said that the demand situation in the economy has remained sluggish in the last few months.
Godrej Consumer Products stock opened in the red at Rs 1179.90 on the BSE in the morning. After this, it fell by about 11 percent from the previous close price to a low of Rs 1102. The stock price has come down 8 percent in the last one week.
The Volume Of Soap And Household Insecticide May Decline
According to the statement of Godrej Consumer Products, the volume of both soap and household insecticides is likely to decline in the quarter ending December 31, 2024.
Despite growth in domestic revenue, EBITDA may decline due to margin pressure. The company said the shaky market conditions and external pressures are impacting its main business segments.
The 20-30% annual rise in the palm crude oil prices and the derivatives market have impacted the soap sector. This category contributes to one-third of our standalone revenue, the firm said.
To alleviate the cost pressures, Godrej Consumer Products increased prices, trimmed a few grams in every bar of soap, and widened its trade plans.
This has impacted inventory in the company’s wholesale and domestic channels. The firm anticipates that the volume increase will normalize after prices settle in the coming months.
A Top Brokerage gives ‘buy’ Rating
The international brokerage firm expects Godrej Consumer Products stock to rise. The broker has provided a “buy” rating on this stock.
The brokerage has provided an estimate of 1,550 per share for the stock. This is 25% higher than the stock’s closing price on the BSE on December 6.
However, the brokerage believes that the impact of inflation and weather may affect the company’s third-quarter earnings. Another brokerage has also given a ‘buy’ rating to the stock. At the same time, a top brokerage has maintained an ‘overnight’ call.
Quick Fact
| Company name | Godrej Consumer Products |
|---|---|
| Stock fell by | 11% |
| Date of fall | 9 December |
| October-December growth | Flat |
| Demand status | Sluggish |
| Volume decline in | Soap, insecticides |
| Domestic revenue | Growth |
| EBITDA | May decline |
| Reason for margin issue | High palm oil prices |
| Palm oil price rise | 20-30% |
| Soap revenue share | One-third |
| Cost-cutting measures | Price hike, gram cut |
| Inventory impact | Wholesale, domestic |
| Volume normalization | Expected soon |
| Jefferies rating | Buy |
| Possible target price | ₹1,550/share |
| Target increase | 25% |
| UBS rating | Buy |
| JPMorgan rating | Overnight |
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