Home / Markets / Stock Markets /  'Journey to great has begun': Why Jefferies is bullish on Godrej Consumer shares
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Jefferies is bullish on Godrej Consumer shares as it believes that the company's journey from good to great has begun as its new MD intends to invest in the core portfolio, which will be the cornerstone of his medium-term ambition of double-digit volume growth. Jefferies' Buy rating on the stock comes with a target price of 1,190 per share.

After spending the past two months gaining an inside view on GCPL, Sudhir Sitapati, the new MD, presented a balanced scorecard encompassing the organization's strengths as well as weakness. 

"In no uncertain terms, the CEO mentioned that driving a double-digit volume growth is the medium-term aspiration, with penetration gains driving half of this while balance coming from share gains, market growth & disruptive innovations. Medium-term Ebitda margins should go up by 150-200 bps," Jefferies note stated. 

Though, two key challenges include cost inflation, tough environment in Indo along with some mistakes by not investing on the core i.e. wipes and prioritized Saniter portfolio while facing pressures in core due to pick-up in competition, the note stated.

Domestic brokerage house Motilal Oswal also has a Buy rating on the Godrej Consumer stock and retains GCPL as its top pick. It has a target price of 1,150. “Valuations are at a significant discount to its Staples’ peers on an average," the brokerage said.

Motilal believes that the management’s target of double-digit volume growth is achievable, given increasing investments to drive penetration levels, rising marketing spends, and reduction in current complexity caused by a large portfolio. Domestic volume growth is turning healthy as seen in FY21 and 1HFY22 after the underperformance in FY16-20.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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