November , 2023
Godrej Consumer Products Ltd.
18:16 pm

Nandini Dasgupta

Company Profile

Mumbai, India is home to the multinational consumer goods manufacturer Godrej Consumer Products Limited (GCPL). According to a demerger plan granted by the Mumbai Honorable High Court of Judicature on March 14, 2001, the consumer products division of the formerly known as Godrej Soaps Limited (GSL) was divided into Godrej Consumer Products Limited in April 2001. The ‘personal and household care’ category is where GCPL conducts business both domestically and abroad. Six functioning clusters at Madhya Pradesh, Assam, Himachal Pradesh, Pondicherry, TamilNadu, and Sikkim are the sites where GCPL operates multiple manufacturing plants. GCPL has a wide-ranging distribution network. Through a system dubbed “Sampark,” a collaborative planning, forecasting, and replenishment system embedded with its ERP (Enterprise Resource Planning) system, GCPL has connected its key distributors in India, resulting in lower inventory levels. GCPL regularly engages with customers to get input on its products which are then used to support efforts related to new product development. 

Household, Beauty & Consumer Goods Industry in India

  • Broadly divided into urban and rural markets, the Indian consumer durables market is drawing in marketers from all over the world. There is a sizable middle class, a sizable wealthy class, and a tiny economically disadvantaged class within this sector. Consumer electronics like fans, cooking and kitchen appliances, lighting fixtures, and white goods like air conditioners, washing machines, televisions, and refrigerators are all part of this industry.
  • In the consumer durables industry, the organized sector is gaining market share from the unorganized sector. An important chance for listed Indian players to grow their market share in the future exists because estimates indicate that 30% (approximately) of the market is still unorganised.

As consumer awareness of technological advancements and their applications across multiple sectors increases, manufacturing automation and artificial intelligence will become significant future trends. 

  •  The $16.8 billion (approximately) beauty and personal care market in India is expected to expand at a compounded annual growth rate of 11%, with the categories of cosmetics and perfumes expanding at a faster rate. Both contemporary grocery stores and businesses that specialize in health and beauty will expand at a CAGR of 15%, respectively. It is expected that the retail food market in India will be reaching approximately $150 bn (approximately) by the year 2025.
  •  International businesses consider India to be one of the important markets from which future expansion is anticipated. Rising disposable income and a more favourable population composition would be the main factors driving India’s consumer market growth. It is anticipated that India’s consumer electronics and appliances sector will rank fifth globally by 2025. From US$ 198 million in 2021 to US$ 481 million by June 2022, foreign direct investment (FDI) nearly doubled in the Appliances and Consumer Electronics (ACE) sector. 
  •  A number of consumer durable companies claim that greater penetration in rural India will drive the industry’s next major growth potential. In tier 3/4 towns and villages, the government’s efforts to electrify rural areas have improved power supply in recent years, opening the door for the use of electrical products.
  •  With growing disposable income, easy access to credit, and widespread use of online sales, demand growth is probably going to pick up speed.

Company Perspective and Review

  • The company has shown steady growth in revenue and profits. Like any other company has faced challenges but their diversified product portfolio and geographical presence has helped them in risk mitigation. Further, being part of the prestigious Godrej Group, carries a legacy and reputation of trust and quality.
  • The company has a good dividend track report and

has consistently declared dividends for the last 5 years with zero financial leverage. Equity Share Capital remains nearly constant over the years, which means the company has not issued significant additional shares or repurchased shares. Reserves and Surplus has been a steady increase from 2019 to 2023, indicating retained earnings and potential profitability.

  •  The financials of Godrej Consumer Products Ltd for the nine months ending in December from 2018 to 2022 show a consistent growth in terms of sales, income, and profitability. The company seems to be in a strong financial position

with increasing EPS (Earning per Share) and decreasing interest costs. The consistent growth in the net profit margin suggests effective cost management and possibly expanding market share.

  •   Upgraded broker recommendation indicates future potential and a bullish signal.

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