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Good News for Godrej Consumer Products | Yadnya Investment Academy

Good News for Godrej Consumer Products | Yadnya Investment Academy

Published on 12 May 2021 Views 70 Comments 0

Godrej Consumer Stock soared more than 20% on the single-day trading session of Wednesday 12th May 2021. What were the reasons behind this high surge in the share price of Godrej Consumer Product Limited? To know read this blog:

Introduction:

Godrej Consumer stock jumped by more than 20% on Friday 12th May 2021 on the appointment of Sudhir Sitapati as its New Managing Director and CEO. Also, the company has announced its Quarterly Result for Q4FY21 on Tuesday 11th May 2021. Here is the detailed analysis of the quarterly results of the company.

i) Q4FY21 Result:

  • In the Consolidated manner, Revenue from Operations of the company was Rs. 2,731 Cr. in Q4FY21. Revenue for the company in Q4FY21 was up by 26.8% YoY from Rs. 2,154 Cr. in Q4FY20. Sequentially, the Revenue of the company has gone down by 10.6%.
  • Meanwhile, the Operating Profit of the company also grew by 15.2% YoY from Rs. 477 Cr. in Q4FY20 to Rs. 549 Cr. in Q4FY21. Quarter-on-Quarter, same has gone down by 20.8% from Rs. 693 Cr. in the quarter ended 31st December 2020.
  • Operating Profit Margin (OPM) of Godrej Consumer stood at 20.1% in the quarter ended 31st March 2021, down by 100 bps from March 2020. OPM was 22.7% in Q3FY21.
  • Moving forward to Profit Before Tax, it has increased by 25.8% from Rs. 337 Cr. in the quarter ended 31st March 2020 to Rs. 424 Cr. in the quarter ended 31st March 2021. PBT of the company has decreased by a massive 34% from Rs. 642 Cr. in Q3FY21.
  • The Company witnessed significant growth in Net Profit on YoY basis of 59.1% from Rs. 230 Cr. in Q4FY20 to Rs. 365.84 Cr. in Q4FY21.
  • Net Profit Margin for the period remained at 13.4% with an increase of 270 bps YoY from 10.7% in Q4FY20.

Godrej Consumer- Q4FY21 Results

Godrej Consumer- Q4FY21 Results

ii) FY21 Performance:

  • On a full-year basis, the consolidated business of Godrej Consumer Product Limited has performed well.
  • Revenue from Operations of the company increased from Rs. 9,910 Cr. in FY20 to Rs. 11,029 Cr. in FY21 amounting to a growth of 11.3% YoY.
  • Whereas Operating Profit for the FY20 was Rs. 2,143 Cr. which also grew by 11.4% in FY21.
  • Operating Profit Margin for the whole FY21 was 21.6% for the company, with no change from the previous financial year.
  • Profit Before Tax (PBT) of the company also grew by 18.2% from Rs. 1,760 Cr. in FY20 to Rs. 2,080 Cr. in FY21.
  • Further, the company reported growth of 15% in the Net Profit on a full-year basis from Rs. 1,497 Cr. in FY20 to Rs. 1,721 Cr. in FY21.

Godrej Consumer- FY21 Performance

Godrej Consumer- FY21 Performance

iii) Revenue Mix:

a) Segment-Wise

  • Godrej Consumer has recorded strong growth in its product portfolio across the key segments.
  • The Household Insecticides segment of the company contributes 40% of the total revenue of the company. Revenue from this business segment in Q4fY21 was Rs. 620 Cr. in Q4FY21 which was Rs. 463 Cr. in Q4FY20, amounting to a growth of 34% YoY. Sequentially, sales of Household Insecticides have gone down by 6.3% from Rs. 662 Cr. in Q3FY21.
  • This segment Continue to build on strategic pivots: taking the category beyond mosquitoes, scaling up personal repellents portfolio, and Driving premiumization and innovation-led growth with the launch of Goodknight Gold Flash, Goodknight Smart Spray, and Goodknight Natural Neem Products
  • The second highest contributor segment of the company in its sales is Soap, wherein it contributes around 29% of the sales of the company as of March 2021. This segment has performed better among all segments in Q4FY21 and witnessed strong double-digit growth of 41% YoY from Rs. 313 Cr. in Q4FY20 to Rs. 442 Cr. in Q4FY21. Revenue of the Same segment gone down by 7.5% from Rs. 478 Cr. in Q3FY21.
  • In this segment, the company continues to gain market share driven by micro-marketing initiatives.
  • Also, New launches in Health are scaling up well. Navigating high input cost through calibrated price increases.
  • Further, the Hair Colours Segment of the company has also recovered well and has grown by 25% YoY from Rs. 131 Cr. in Q4FY20 to Rs. 164 Cr. in the quarter ended 31st March 2021. Sequentially, this has also gone down by 7.7% from Rs. 177 Cr. in the quarter ended 31st December 2021. This segment contributes 11% of the total revenue of the company.
  • This segment also continued to gain market share. Key Products in this segment- Godrej Expert Rich Crème and Godrej Expert Easy 5 Minute Shampoo Hair Colours performing well.
  • Other Categories have also grown from Rs. 169 Cr. in Q4FY20 to Rs. 207 Cr. in Q4FY21. This segment contributes 13% of the revenue of the company.

Godrej Consumer- Revenue Mix: Segment-wise

Godrej Consumer- Revenue Mix: Segment-wise

Godrej Consumer- Revenue Mix: Segment-Wise

Godrej Consumer- Revenue Mix: Segment-Wise

b) Revenue Mix: Geography Wise:

  • Geographically, India Business of the Godrej Consumer contributes the highest 54% as of March 2021 to the total Revenue of the company which grew from 51% in Q4FY20. Revenue from India business grew from Rs. 1,114 Cr. in Q4FY20 to Rs. 1,500 Cr. in Q4FY21.
  • The Strong double-digit sales growth in Indian business is driven by Soaps, Household insecticides, recovery in hair colors.
  • On a full-year basis, the contribution of the India business towards the revenue of the company has grown by 14.3% from 5,474 Cr. in FY20 to Rs. 6,254 Cr. in FY21.
  • Next to India, Africa Business contributes 23% of the revenue of the company as of March 2021. Earlier in Q4FY20, this business contributes 22% of the total revenue of the company.
  • Africa Business has grown by 30.2% YoY to Rs. 630 Cr. in Q4FY21 to Rs. 484 Cr. in the same quarter of last financial year. On yearly basis, this business has grown by 7.9% from Rs. 2,316 Cr. in FY20 to Rs. 2,498.5 Cr. in FY21. Also, sequentially, the contribution from this business has gone down by a huge 19.1%.
  • Business of Godrej Consumer in other countries contributes to almost 6% of the total revenue of the company.
  • Africa and Other Strong sales growth in Southern Africa, West Africa, and parts of East Africa.
  • This business region has shown Strong performance across categories with Seeding new go-to-market initiatives in key countries
  • Lastly, Indonesia contributes 17% of the total revenue of the company as of Q4FY21. Year on Year, revenue from this country has gone down by 4% from 17% in Q4FY20.
  • In this business region company is gaining Market share in Household Insecticides continue.
  • With strong traction in Hygiene, launched Saniter Health Soap and Saniter Eco sense powder-to-liquid handwash

Godrej Consumer- Revenue Mix: Geography Wise

iv) Key Highlight:

a) New Management:

  • Mr. Sudhir Sitapati is appointed as the new Managing Director and CEO of Godrej Consumer with effect from 18th October 2021.
  • He was Executive Director of Food & Refreshments at HUL.
  • Earlier, in June 2020, Vivek Gambhir, former MD & CEO Godrej Consumer stepped down from the company.
  • After the exit of Vivek Gambhir from the management, Nisaba Godrej, the Executive Chairman of the company took the additional charge of MD & CEO of the company.
  • This step by the company was not appreciated by the market as the company was also going through hard times in terms of performance.
  • Mr. Sudhir Sitapati is having 22 years of experience in the HUL, one of the best managed FMCG Company in India.
  • In HUL, He led the team across the categories in India, Europe, South East Asia, etc.

b) Growth across segments:

  • A third consecutive quarter of strong double-digit sales growth; double-digit sales growth of 11% in FY2021.
  • Strong innovation-led growth.
  • Consolidated EBITDA margins at 21%.

c) Scaling up E-commerce; saliency at 4% in FY2021

Conclusion:

The appointment of Mr. Sudhir Sitapati as the new CEO and MD of the company is highly appreciated by the market. Also, this can be a great lesson on Corporate Governance for the Investors, that how the market reacts when the right person is placed in the right position of the company. Godrej Consumer Stock was performing quite poorly from the last few periods but bounced by more than 20% on the announcement of a new managerial person. Furthermore, one should not invest in any stock based on news, but should carefully go through other investing parameters as well. Consult your financial advisor before investing.

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