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Tuesday, November 25, 2008

Motilal Oswal Securities - BUY Godrej Consumer Products

Motilal Oswal Securities has maintained a ‘buy’ rating on Godrej Consumer Products as it feels that margins in the FMCG sector would rise significantly and the overall volumes would also improve.

Godrej Consumer
CMP: Rs 115
TARGET PRICE: NA


Motilal Oswal Securities has maintained a ‘buy’ rating on Godrej Consumer Products as it feels that margins in the FMCG sector would rise significantly and the overall volumes would also improve. “The FMCG sector witnessed strong sales growth in the past 18 months largely on the back of 10-12% price increase adopted by FMCG companies across categories,” says the report.

However, it adds that this increase has not had any impact on volume pick-up, nor has it resulted in significant downtrading by consumers. According to the broking firm, the company “is hopeful of a revival in volume growth as inflationary pressures are receding.” Motilal Oswal Securities is of the view that improved margins would result in PAT growth accelerating to 31% in FY10 versus just 2% in FY09.

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