Shares of Godrej Consumer Products Limited advanced over 1 percent to Rs 1,225 in morning trade on April 25 after UBS increased its target price citing that new products could boost revenue.
The international brokerage, which maintained a 'buy' call, has raised the target price to Rs 1,450 from Rs 1,200. The new price target implies a 19.5 percent upside from the previous close of Rs 1,213.
"We expect strong sales growth in the company's domestic home insecticide (HI) business and the liquid detergent business provides a large sales growth opportunity," UBS said in a report. The brokerage also added that the HI segment will likely benefit from exclusive rights to a new molecule until FY32.
In February, the company launched its Goodknight Agarbatti, India’s first, legal anti-mosquito incense sticks. The incense stick adopts a novel molecule called Renofluthrin (RNF), and GCPL has partnered with a manufacturer to develop it exclusively for their products. RNF is believed to be twice as potent as other molecules commonly used in home insecticides (HI) in India, according to GCPL.
Analysts anticipate that GCPL's exclusive access to RNF, combined with its robust distribution network, will enable the company to capture a larger share of the market in the anti-mosquito incense sticks segment.
The category accounts for approximately 30-40 percent of GCPL's total revenues. The company's sales have experienced a compound annual growth rate (CAGR) of 10 percent over the past three years and the profit growth has been comparatively slower, with a CAGR of only 3 percent during the same period.
GCPL shares have gained over 7 percent since the start of the year.
0 Comment