Godrej Consumer Products has cut the prices of products such as hair color, air fresheners, liquid detergents and deodorant categories by 7-10%.
This step has been taken in order to pass on the benefits of the recent reduction in GST rates to consumers.
This will result in a decline in the prices of their products and would make them more competitive against their peers. Reduction in prices will result in an increase in overall sales and market share.
Recent performance of the company indicates that their India business doing comparable sales growth of ~11% led by ~10% volume growth. International business also reported comparable growth of ~9%.
We believe, moving ahead there will be stronger growth in H2FY18 as post GST, the trade channels are getting back to normal and consumer offtakes have improved. We have a positve outlook on the stock. The stock trades attractive at ~46.5x & 36.9x its FY18E & FY19E P/E respectively.
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