Godrej Consumer Products falls post Q1 results; Morgan Stanley still overweight

Shares of Godrej Consumer Products fell more than 2% to Rs 1,008 in early trades on August 8 after the company reported a 7.6% drop in annual net profit in the April-June quarter. of fiscal year 24.
Brokerage firm Motilal Oswal has assigned a buy rating of the stock with a target price of Rs 2,100. National brokerage said revenue and operating profit were in line with its estimates, but net profit was an error. He said net profit fell short of estimates due to the Rs 77 billion in stamp duty payment for the acquisition of Raymond’s consumer care business. Additionally, Morgan Stanley has an “overweight” rating on the stock with a target price of Rs 1,072. The offshore brokerage said the Q1FY24 results fell short of estimates, but the results far outweighed the company’s performance. “Improving trends in growth, margins and capacity investment are positive for the business,” he said. Godrej Consumer Products aims for volume growth, not price growth in the future. The company said on a conference call about Q1FY24 earnings for the next 18 to 36 months.
Nomura Institutional Equities also has a buy rating on the stock with a target price of Rs 1,225 per share. The brokerage said the T1FY24 results were in line with their estimates, and that Godrej Consumer Products outperformed its peers. “Devaluation of the Niara (Nigeria’s currency) will affect overall sales growth by 200 basis points,” the broker said in a note.
Meanwhile, CLSA has a “underperformer” rating on the stock with a target price of Rs 1,040. he said in a note. In May, the Niara exchange rate was 450 Niara/$. At the end of June, it rose to Rs 750 Niara/USD, the company said on its Q1FY24 earnings conference call. The exchange rate difference is presented as an exchange rate loss for the quarter.