“GCPL’s Q4FY12 consol Net sales, EBITDA and recurring PAT came in at Rs13.2bn (up 32% YoY), Rs2.48bn (up 40% YoY) and Rs1.76bn (up24% YoY) v/s our expectations of Rs13.49bn, Rs2.5bn and Rs1.8bn, respectively. Indian subcontinent posted 21% sales growth, led by Soaps and Household Insecticide which grew 30% and 28%, respectively. Strong Soap performance was aided by low base. However, Soaps category posted a sedate 4% volume growth, per GCPL. Household Insecticide’s performance (eight consecutive quarters of 25% plus growth) reflects the impact of strong distribution synergies with GCPL as well as innovative new launches backed by aggressive brand investments. GCPL has likely gained market share as category grew only 9%. International revenues grew 49% led by Megasari (up 30%) and LATAM division (up 29%) and inorganic growth (Darling). International performance was driven by new launches, distribution expansion and realisation of operational synergies. Operating profitability in international business improved sharply (EBITDA up 2x) on the back of better produc”
“Consolidated operating margins improved 100bps YoY reflecting the impact of recent price hikes as well as improved mix. Net forex impact on standalone and consolidated entity for the quarter stood at Rs(8)m and a gain of Rs17m, respectively. We maintain ‘BUY’ rating, with a revised 12 month forward TP of Rs575 (P/E of 22x FY14e). Continued traction in Household insecticide segment, coupled with improved balance sheet (leverage down to 0.33x) and working capital metrics lead us to revise our P/E multiple to 22x (earlier 20x), still a discount of 10% to other tier II consumer companies. Discount is fair in our view, given the high proportion of overseas revenue (38%),” says Prabhudas Lilladher research report.
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