Business
Brokerage firms are bullish on Godrej Consumer Products amidst market volatility. Despite a dip due to a weak Q3 update, the stock is rebounding.
As of 1 PM on Monday, December 16, 2024, Godrej Consumer Products shares were trading higher at ₹1,115.35.
JP Morgan maintains an overweight rating on Godrej Consumer with a target price of ₹1,365.
The 85-90% slowdown in Godrej Consumer's volume growth is considered cyclical. Q2FY25 volume growth was 7% and is now increasing.
To combat inflation, the company increased product prices in December. Seasonal effects may impact Q4FY25 performance, with recovery expected in H1FY26.
A sluggish Q3FY25 update suggests potential margin decline due to inflation, possibly below the normal 24-27% range, compared to Q3FY24's 29.7%.
JP Morgan expects mid-single-digit volume growth in Q3FY25, with temporary margin pressure, which the company is expected to manage in the next fiscal year.
JP Morgan sees a favorable risk-reward profile after the recent stock dip. Strong company performance is expected to lead to market outperformance.
JP Morgan advises investors to monitor the stock, citing the company's long-term plans and strong ability to navigate inflation.
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