India's Godrej Consumer misses third-quarter profit estimates on moderating urban demand

Godrej Consumer Products

24/01/2025 11:57

Jan 24 (Reuters) - India's Godrej Consumer Products  GOCP.NS  reported a smaller-than-expected increase in third-quarter
profit on Friday, hurt by the prolonged slowdown in urban demand.
    The company, which makes the Cinthol brand of soaps among other products, reported a 14.2% rise in consolidated net profit
of 4.98 billion rupees ($57.76 million) for the quarter ended Dec. 31.
    Analysts, on average, expected a profit of 5.39 billion rupees, as per data compiled by LSEG.
    Revenue from the sale of products rose 3% to 37.49 billion rupees, while raw material costs rose 2.3% due to a spike in key
commodity prices such as palm oil.
    
    KEY CONTEXT
    The company had said in December that about two-thirds of its India business was under demand and margin stress due to a
slowdown in urban consumption and higher costs of palm oil, a key raw material.
    While rural demand has picked up in the last four quarters, it has been offset by a slowdown in urban consumption due to a
delayed winter, sticky inflation, slow wage growth and not enough job opportunities, analysts have said.
    Godrej has hiked prices moderately to offset higher commodity prices but that hurt sales volumes, which were flat compared
to last year. The company had warned that price hikes could affect its consumer and wholesale businesses.
    Larger peer Hindustan Unilever  HLL.NS  reported a marginal gain in quarterly revenue and profit on Wednesday, although it
cautioned of near-term margin stress due to slow urban demand.
    
    PEER COMPARISON  
                                Valuation (next 12        Estimates (next 12       Analysts' sentiment
                                months)                   months)                  
                        RIC     PE      EV/EBIT  Price/S  Revenue       Profit     Mean      # of      Stock to price  Div yield
                                        DA       ales     growth (%)    growth     rating*   analysts  target**        (%)
                                                                        (%)                                            
 Godrej Consumer                                                                                                    
 Marico Ltd                                                                                                         
 Hindustan Unilever                                                                                                  
 Britannia Industries                                                                                               
    
 * Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT


OCTOBER TO DECEMBER STOCK PERFORMANCE
    
    -- All data from LSEG
    -- $1 = 86.2210 rupees

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Godrej Consumer Products Stock Performance    https://tmsnrt.rs/4ax5fQG
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Ananta Agarwal in Bengaluru; Editing by Savio D'Souza)
 ((Ananta.agarwal@thomsonreuters.com;))