(Reuters) – India’s Godrej Consumer Products reported a bigger-than-expected rise in second-quarter profit on Thursday, helped by a pick-up in rural demand.
The Cinthol soap maker reported about 14% rise in consolidated net profit at 4.91 billion rupees ($58.42 million) for the quarter ended Sept. 30.
Analysts, on average, expected a profit of 4.86 billion rupees, as per data compiled by LSEG.
The sale of products rose over 2% to 36.47 billion rupees. Total expenses were flat, even as raw material costs climbed nearly 18%.
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KEY CONTEXT
Growth in rural demand has outpaced urban over the last three quarters, aiding companies like Godrej, which derives around 30% of its revenue from the country’s hinterlands.
Rural demand was helped partly by higher government spending to boost the rural economy.
However, the price of palm oil, a key raw material used in everything from food products to soaps, has been rising since March, weighing on consumer goods makers’ margins.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBI Price/ Revenue Profit Mean # of Stock to Div
TDA Sales growth (%) growth (%) rating* analyst price yield
s target** (%)
Godrej Consumer 51.03 36.04 8.69 8.20 21.06 Buy 32 0.85 1.35
Products
Marico 48.19 35.00 7.62 10.14 11.86 Buy 36 0.93 1.45
Britannia Industries 53.39 37.31 7.26 9.69 12.85 Buy 34 0.98 1.28
Dabur India 44.90 34.45 7.33 9.28 13.08 Buy 39 0.85 0.98
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 84.0410 Indian rupees
(Reporting by Ashna Teresa Britto in Bengaluru; Editing by Eileen Soreng)
