Godrej Consumer Q4 Review – Soft Quarter But Outlook Remains Stable: Yes Securities

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Godrej Consumer Products Ltd. reported a soft quarter both on growth and margin fronts led by a 7% decline in India ‐ home care business, continued sluggishness in Indonesia business and sharp margin fall in international business especially in South Africa.

Soft growth in its key household insecticide, air freshener and hair care category and 15% constant currency decline in Indonesia business dragged topline despite ~ 12% price hikes taken by the company.

While the Africa margin plunge was exacerbated by a one ‐ off inventory pilferage, we expect margin to improve on better growth prospects.

Godrej Consumer’s management indicated that Q1 can see further margin pressures owing to continued inflation in palm and crude prices post February and a pick ‐ up in advertising and promotion spends, we see margin improvement only from Q3 onwards.

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