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Godrej Consumer Product

The year 2020 will go down in history as the black year with a silver lining. A tiny little virus held the entire world to ransom! Fever caused fear like never before.

Consequently, the demand for hand sanitizers (like that for risk assets) witnessed almost a vertical jump. In 2019, sanitizer penetration in India was merely 1%. It increased to 45.6% by the end of September 2020, according to Kantar—a leading data, insights and consulting company.

As 2020 draws to a close, the popularity of sanitizers is gradually waning, it being a costly product for a price-sensitive market like India. FMCG market experts believe, the demand for sanitizers might settle at a much lower level, post COVID. The only blessing in the disguise has been that the growing awareness amongst Indians about health and hygiene habits could be durable.

Not so surprisingly, some leading FMCG companies in India have been recalibrating their growth strategies. Health and hygiene segments have become the lynchpin of their future growth plans.

Godrej Consumer Products is one such company that seems to have decided not to let a crisis go to waste.

COVID-19 assumed the centre stage throughout 2020 but that doesn’t mean other infections causing fever became less prevalent, especially the ones spread by mosquitoes. Recognizing this, Godrej Consumer Products, a company that manufactures and sells mosquito repellent products under one of India’s most popular brands—GoodKnight—is preparing for the next leg of growth.

The company offers its products mainly across three categories—home care, personal care and hair care and caters largely to three emerging markets—Asia, Africa and Latin America.

(Source: company records)

Importantly, Godrej Consumer Products commands a leadership position in the household insecticides market in India and Indonesia. As far as the women hair care segment is concerned, it claims the top spot in Africa. It is a dominant player in the hair colour segment too and ranks 1st in the air freshener category in India and Indonesia. Godrej Consumer Products is the second largest player in India’s soap market.

Contribution of various segments in the top line

(Source: company records)

Over the past 2 years, growth has been in the slow lane for Godrej Consumer Products.

The company’s international business dragged its overall performance to a large extent. The Africa business didn’t do as anticipated and the adverse currency movement and macroeconomic challenges negatively affected the Latin American business.

Financial performance of the company in H1FY21 suggests that FY21 might turn out to be better than FY20 for the company.

Godrej Consumer Products: financial performance…

(Source: company records)

In H1FY21, the company had witnessed a higher growth in secondary sales as compared to primary sales in household insecticides and soaps segments in India. Extended regional lockdowns had adversely affected the company’s production in Q2FY21. Nonetheless, the company has been expecting that Q3 would be better.

What does the future growth path look like?

With Nisaba Godrej’s appointment as MD & CEO in July 2020 for 2 years, Godrej Consumer seem to be gearing up to take tough decisions. She has been vocal about the need to pursue disruptive innovation and distributed leadership. According to her H is the new HI, i.e., Hygiene is the new Household Insecticides for Godrej Consumer. The company has been laying the foundation to accelerate growth in future.

Four pillar growth strategy of Godrej Consumer Products

  1. Enhancing the market share in the existing product categories and geographies
  2. Focusing on innovation
  3. Improving the share of digital revenues
  4. Improving product positioning and supply chains

The company had a few launches in the hygiene category in recent times, including veggie wash, bathroom cleaners, and floor and toilet cleaners. It also launched some innovative products such as the GoodKnight Gold Flash Liquid Vaporizer machine in India. Godrej Consumer Products also introduced a value for money product in the hair colour category, thereby taking its no ammonia innovation one step forward.

Industry experts believe that as the popularity of sanitizers ebbs, the hygiene segment will be defined by soaps, hand-wash, and disinfectants. The Company has been hopeful that its powder-to-liquid-hand-wash, Godrej Protekt Mr. Magic - offered at a price-point of Rs 15 - may get good traction going forward.  Godrej Consumer Products derives ~24% of its revenues from value-for-money products and aims to make Protekt a Rs 500-crore brand over the next 3 years.

Concluding thoughts

Godrej Consumer Products is a proxy on consumption growth in some of the important emerging markets of the world. Over the last few years, economic growth in emerging markets, including that in India, was worse than one could have anticipated a few years ago.

As the growth prospects of emerging economies are improving, companies such as Godrej Consumer Products may have a better chance to accelerate their growth in future. Structural changes, technological innovations, potential improvements in supply chain and strong leadership may help Godrej Consumer Products get its mojo back.

Please Note (read as a disclaimer): None of the stocks discussed in the article are recommendations to buy, hold or sell. This could just be the starting point for deeper analysis that you might want to carry out on your own. You may also take professional help as you feel appropriate.

If you are investing in any family run company, besides governance, you may also want to take stock of significant developments in the lives of the promoters. Sometimes, their personal life can overshadow market sentiments. Also pay attention to issues such as pledging of shares by the promoter group and the working capital.

Important disclosure: Ventura’s technical expert Mr Bharat K Gala made a video to discuss the chart pattern of Godrej Consumer Products on October 04, 2020. For your convenience we have embedded the link below. If you follow his advice, you should also mind crucial price levels he has highlighted in the video for taking appropriate action.


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We, Ventura Securities Ltd, (SEBI Registration Number INH000001634) its Analysts & Associates with regard to blog article hereby solemnly declare & disclose that:

We do not have any financial interest of any nature in the company. We do not individually or collectively hold 1% or more of the securities of the company. We do not have any other material conflict of interest in the company. We do not act as a market maker in securities of the company. We do not have any directorships or other material relationships with the company. We do not have any personal interests in the securities of the company. We do not have any past significant relationships with the company such as Investment Banking or other advisory assignments or intermediary relationships. We are not responsible for the risk associated with the investment/disinvestment decision made on the basis of this blog article.







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