Godrej Consumer Products Ltd's Q3FY19 consolidated net profit declines 1.5% yoy to Rs423.5cr : Misses Estimates

The company’s consolidated revenue stood at Rs2,721.9cr, up 3.5% yoy and 2.4% qoq.

Jan 29, 2019 03:01 IST India Infoline Research Team

Godrej Consumer Products Ltd Q3FY19

Consolidated Results Q3FY19: (Rs. in cr)

Q3FY19 YoY (%)
Revenue 2,721.9 3.5
EBITDA 608.7 3.3
EBITDA Margin (%) 22.4 [3]
Net Profit (adjusted) 423.5 [1.5]
***EBITDA margin change is bps
Godrej Consumer Products (GCPL) reported muted Q3FY19 numbers; though the revenue met the consensus estimates broadly, PAT was a big miss. Company's reported revenue grew merely by 3.5% yoy to Rs2,721.9cr, broadly in-line with estimates. Advertisement cost was down 63bps yoy as percent of net sales to 8%. EBITDA reported 3.3% yoy growth to Rs608.7cr, in-line with estimate and EBITDA margin stood flat at 22.4%. Higher interest outgo and lower other income led to PAT decline of 1.5% yoy to Rs423.5cr, ~19% lower than estimates.
Domestic business performance:
  • The India business reported growth of 5.7% yoy to Rs1,505.6cr. Volume growth for the quarter was mere 1% yoy. The EBITDA grew by 11%, margin expansion of 140bps yoy was aided by cost saving initiatives (driven by project Pi).
  • Household insecticide (HI) business remained flat on yoy basis due to the unfavourable season in South and share of growth getting diverted to incense sticks. Company launched naturals neem incense stick in Andhra Pradesh and Telangana at Rs15 for 10 sticks.
  • Revenue of soaps category grew at 2% yoy and continued to gain market share. Growth was aided by effective micro-marketing initiatives, focus on new states and strong on-ground execution.
  • Hair color reported flat revenue growth during the quarter (against a strong 21% yoy growth in Q2FY19). Company continued to focus on activations and effective media campaigns in order to gain new consumers into the category.
  • Others and unbranded/export segment reported strong yoy growth of 26% and 11% respectively.
  • Total branded volume growth stood at 1% yoy against a 2 year CAGR of 10%.

International business performance:
  • The international business reported constant currency (CC) sales growth of 10% yoy.  
  • Indonesia business was driven by sales growth of 7% yoy in CC led by improvement in Household Insecticides segment. Adjusted EBITDA margin contracted by 160bps yoy led by the temporary impact of crude oil and upfront marketing and trade promotion investments.
  • GUAM (Africa, USA and Middle East) reported 4% yoy CC growth led by West and US cluster growth; South Africa continues to be soft, however, gradual recovery was seen in Kenya.
  • International business reported 300bps yoy contraction in EBITDA margin to 15% (adversely impacted by around 70bps due to the adoption of hyperinflation accounting in Argentina). Indonesia and GUAM reported 160bps and 80bps yoy contraction in EBITDA margin respectively.

Technical View:

Godrej Consumer Products Ltd is currently trading at Rs. 757.30, down by 1.15 points or 0.15% from its previous closing of Rs. 758.45 on the BSE.
The scrip opened at Rs. 760 and has touched a high and low of Rs. 771.45 and Rs. 738.20 respectively. So far 11,72,132 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.

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