Goldman Sachs bets on this largecap personal products co. amid strong likelihood of turnaround

 Godrej Consumer Products (GCPL)shares are in focus as global brokerage Goldman Sachs has maintained its buy call on the stock with a target of Rs 1,525. This target implies a potential upside of 14 per cent.

The brokerage said that after the FMCG major Hindustan Unilever has increased soap prices, GCPL's ability to increase prices has improved.

HUL has raised prices 5-7 per cent in a number of SKU’s in its soap portfolio, added the brokerage.

Notably, the brokerage highlighted that the soap business contributes 35 per cent of GCPL's India business. Goldman Sachs expects GCPL- a personal products entity to also follown suit which will gradually lower the margin pressures over next 6 months. See a strong likelihood of a turnaround in earnings growth after 5 years of weak growth.

GCPL's Q1 earnings

The company's revenue from operations fell 3.4 per cent YoY to Rs 3,331.58 crore during the quarter. Profit before tax (PBT) stood at Rs 644.03 crore in Q1 FY25, up 34.21 per cent YoY. During the quarter, EBITDA grew 13 per cent YoY and EBITDA margin increased by 310 bps to 21.9 per cent.

India business organic volume grew by 8 per cent and reported volume grew by 10 per cent.