Momentum Pick: Godrej Consumer set for up to 6-13% gains; attractive valuation makes it a top buy

Momentum Pick: Godrej Consumer set for up to 6-13% gains; attractive valuation makes it a top buy

Shares of Godrej Consumer Products (GCPL) are off their 52-week high of Rs 978 but look poised to breach this level for gains of 6-13%. With the valuations turning attractive, the stock could see a rally on favourable technical and fundamental triggers.

GCPL shares ended marginally lower at Rs 969.90 on Wednesday.

Godrej Consumer is a leading emerging market company with a turnover of more than Rs 12,000 crore. The group claims to have the backing of 1.2 billion consumers globally across businesses. The company has a presence in key product categories such as soaps, hair colour, and HI.

Technical View
Godrej Consumer Products: Buy | Target: Rs 1,030 | Stop Loss: Rs | Upside: 6%
GCPL is showing a gradual upmove and looks poised to test levels between Rs 1,000 and Rs 1,030 with support at Rs 920, Nilesh Jain, Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking said.

Godrej Consumer Products shares have given returns of more than 19% over a 12-month period, outperforming Nifty50 which has risen 1% during this period, according to Trendlyne data. The average volatility has been relatively low as the counter has traded with a 1-year Beta of 0.57.

Trendlyne’s average broker target on this stock is Rs 1,020.

Momentum indicators RSI and MFI are in the medium range of 59.8 and 65.1, respectively, indicating a further upside from the current levels. A number above 70 indicates that the stock is trading in an overbought territory while a number below 30 suggests that the stock is oversold.

Fundamental View

Sharekhan: Buy | CMP: Rs | Target: Rs 1,100 | Upside: 13%
Sharekhan maintains a ‘Buy’ on Godrej Consumer Products with a revised price target of Rs 1,100. The stock was recommended at a trading price of Rs 972. The stock is currently trading at attractive valuations of 44.1X/37.5X its FY2024E/FY2025E earnings.

1) The company targets consistent improvement in OPM (operating profit margins) through premiumisation and operating efficiencies in the medium to long run, Sharekhan said. OPM is expected to be around 18-18.5% in Q4, it said.


2) Improving growth prospects in key markets and discounted valuations against peers, makes it a good pick in the consumer goods space, the brokerage firm said. “GCPL is expected to achieve double-digit revenue growth in Q4FY2023 with good recovery in the domestic household insecticide (HI) category and good recovery in the Indonesia business.

3) Key medium-term growth drivers for double-digit revenue and earnings growth are recovery in the domestic HI business, Indonesia business growing consistently and Africa business growing in double digits.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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