Godrej Consumer Products Ltd. – Value Analysis (BSE INDIA:532424) : October 6, 2017

Capitalcube gives Godrej Consumer Products Ltd. a score of 47.

Our analysis is based on comparing Godrej Consumer Products Ltd. with the following peers – Dabur India Limited, Marico Limited, Colgate-Palmolive (India) Limited, Gillette India Limited, Jyothy Laboratories Limited, Emami Limited, Hindustan Unilever Limited and Procter & Gamble Hygiene & Health Care Ltd. (500096-IN, 531642-IN, 500830-IN, 507815-IN, 532926-IN, 531162-IN, 500696-IN and 500459-IN).

Investment Outlook

Godrej Consumer Products Ltd. has a fundamental score of 47 and has a relative valuation of UNDERVALUED.

Fundamental Score

Access our research and ratings on Godrej Consumer Products Ltd.

Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It trades at a lower Price/Book multiple (12.46) than its peer median (17.10).
  • The market expects 532424-IN‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • 532424-IN employs relatively high amounts of assets while generating relatively median profit margins.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • 532424-IN‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While 532424-IN‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company seems to be over-investing in a business with median returns.
  • 532424-IN has the financial and operating capacity to borrow quickly.

Access our research and ratings on Godrej Consumer Products Ltd.

Leverage & Liquidity

532424-IN has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 6.75% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 1.94%), and a well-cushioned interest coverage level of 11.47x, 532424-IN can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 8 chosen peers for the company, only 5 of the stocks have an outstanding debt balance. Companies with no debt include 500830-IN.

532424-IN has maintained its Quick & Able profile from the recent year-end.

  • 532424-IN‘s interest coverage is downward trending but is still within one standard deviation above its five-year average interest coverage of 10.87x.
  • Compared to 2017, interest coverage has remained relatively stable for both the company (11.47x) and the peer median (40.77x).
  • 532424-IN‘s debt-EV is less than (but within one standard deviation of) its five-year average debt-EV of 7.26%.
  • Like the interest coverage trend, debt-EV has remained relatively stable for both the company (6.75%) and the peer median (1.94%).

Access the detailed analysis for Godrej Consumer Products Ltd.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Dabur India Limited 2 1.3 26.25 145.46
Marico Limited 0.64 1.95 70.4 317.73
Colgate-Palmolive (India) Limited 0 0.93 No interest exp 64431.49
Gillette India Limited N/A 1.01 55.3 5427
Jyothy Laboratories Limited 7.27 0.66 3.73 16.18
Emami Limited 1.94 0.59 7.2 126.35
Hindustan Unilever Limited 0.14 1.32 0 1788.33
Procter & Gamble Hygiene & Health Care Ltd. N/A 0.96 65.47 10389.66
Godrej Consumer Products Limited 6.75 1.25 11.47 41.81
Peer Median 1.94 1.01 40.77 317.73
Best In Class 0.14 1.95 No interest exp 64431.49

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Company Profile

Godrej Consumer Products Ltd. engages in the manufacture of personal and household care products. It offers household insecticides, hair color, liquid detergents, soaps, and air fresheners. It operates through the following geographical segments: India, Indonesia, Africa, and Others. The company was founded on November 29, 2000 and is headquartered in Mumbai, India.

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