Godrej Consumer Products shares plunged 10 percent to hit the lower circuit in early trade on Wednesday after the resignation of Managing Director and Chief Executive Officer Sudhir Sitapati. The sudden exit triggered concerns over execution and leadership transition at the consumer goods company.

Godrej Consumer Products stock fell 10 percent to Rs 922.5, but later trimmed losses to 9 percent. The stock has now fallen over 25 percent so far this year, compared with a 6.4 percent decline in the Nifty 50. The company's market capitalisation fell way below Rs 1 lakh crore to Rs 95,600 crore.

Sitapati resigned as MD and CEO with immediate effect, with Aasif Malbari appointed as his successor. The abrupt leadership change drew a mixed response from brokerages, with Jefferies and Citi retaining their Buy calls, HSBC downgrading the stock to Hold and CLSA maintaining an Underperform rating.

Brokerages broadly said that the company's strategic direction remains unchanged under the new leadership, but differed sharply over the execution outlook and the valuation investors should assign to the stock following the transition.

Jefferies sees 36% upside; Citi retains Buy despite near-term concerns

Jefferies retained its Buy rating on Godrej Consumer Products stock with a target price of Rs 1,400 per share, implying around 36 percent upside from Tuesday's closing price. The brokerage said that Malbari has been appointed as Sitapati's successor, while Vishal Kedia has been named interim chief financial officer.

According to Jefferies, the new CEO's priorities include strengthening execution and accelerating decision-making. The company will focus on returning its home insecticides and soaps businesses to growth while continuing to scale newer businesses. The company is also aiming for volume-led growth across regions and better conversion of revenue growth into profits, according to the brokerage.

Citi also retained its Buy call on Godrej Consumer Products, with a target price of Rs 1,350 per share, although it cautioned that the stock was likely to react negatively in the near term following Sitapati's resignation. The brokerage said Malbari's appointment provides continuity. It added that the company's FY27 guidance and strategic direction remain unchanged.

Management commentary indicated a push towards greater transparency, accountability and faster execution, Citi said. Promoter expectations also appear to be higher in areas such as liquid vaporizers in India. Citi saw no evidence of a strategic reset, with the emphasis instead remaining on improving execution.

HSBC downgrades stock to Hold; CLSA sees 25% downside

HSBC turned more cautious, downgrading Godrej Consumer Products to Hold and setting a target price of Rs 1,120 per share. The brokerage said Sitapati's sudden departure creates execution uncertainty despite the appointment of Malbari, who currently serves as group CFO and Africa CEO, as the new MD and CEO. HSBC also reduced the valuation multiple it assigns to the stock, cutting its target price-to-earnings multiple to 40 times from 45 times.

CLSA remained the most cautious among the brokerages, retaining its Underperform call with a target price of Rs 772 per share. The target implies around 25 percent downside from Tuesday's closing price. The brokerage said the strategic roadmap remains unchanged following the CEO transition, with greater emphasis now expected on execution and speed.

However, CLSA highlighted continued challenges in personal wash and home insecticides, where growth and market-share gains have remained weak. The brokerage also cut its target price-to-earnings multiple for Godrej Consumer Products to 32 times from 37 times, reflecting a more cautious valuation following the leadership change.