Godrej Consumer Products Ltd (GCPL) shares saw a sharp cut in Monday's trading session. The stock slumped 10.81 per cent to hit a day low of Rs 1,102. It was last seen trading 9.48 per cent down at Rs 1,118.50. At this price, the scrip has shed 2.28 per cent in the calendar year 2024 so far.
Today's downward move in the stock price came after the FMCG company said it expects challenges in demand and margins during the near term. "The standalone business is expected to report around flattish underlying volume growth (UVG) and around mid-single digit sales growth in this quarter (Q3 FY25)," it stated in an exchange filing. We anticipate a temporary downward breach of the normative EBITDA margins this quarter, it added.
"In parallel but unrelated, the weather conditions have not been supportive (delayed winters in North and cyclone in South India) to the Home Insecticides (HI) segment, contributing one-third to our standalone business. This has impacted HI category growths in the current quarter," the company further stated.
GCPL underscored that the demand conditions in the country have been subdued for the past few months. However, it assured that the margin pressure is expected to be temporary and that the broader business remains strong.
"Our international businesses continue to do well on their relevant strategic objectives. However, we continue to do well on our profitability journey, and this is likely to be the fourth consecutive quarter of healthy EBITDA margins for GAUM (Godrej Africa, USA and Middle East)," it said.
CLSA has assigned an 'Underperform' on the stock, suggesting a lower end target price of Rs 1,000 due the company's view on Q3 FY25 sales and EBITDA warning. "In HI, seasonal volatility would continues despite new product launches. Margins likely to undershoot normal range too," it stated.
Separately, UBS and Jefferies have given a 'Buy' call for GCPL shares with targets of Rs 1,450 and Rs 1,550 respectively.
JPMorgan has maintained its 'Overweight' call for Godrej Consumer with a target price of Rs 1,410. Macquarie kept its 'Neutral' stance but reduced its target to Rs 1,260 from Rs 1,300 earlier.
As of September 2024, promoters held a 63 per cent stake in the FMCG firm.