Oct 31 (Reuters) - India's Godrej Consumer Products reported a quarterly profit drop on Friday, hurt by a temporary sales disruption following the government's sweeping tax cuts.
Consolidated net profit fell 6.5% to 4.59 billion rupees ($52.22 million) in the second-quarter ended September 30.
Revenue rose 4% to 38.02 billion rupees, while expenses climbed 6.4%.
Short-term disruptions notwithstanding, the tax cuts were a "welcome structural reform" set to strengthen long-term consumer demand, the company said.
KEY CONTEXT
Second-quarter results of several Indian consumer goods companies reflected short-term sales disruptions towards the end of the quarter, as retailers rushed to liquidate higher-priced inventory predating the tax adjustment.
Godrej, which sells Cinthol soaps and Goodknight mosquito repellants, had flagged the issue earlier this month, saying retailers clearing older stocks at higher prices have delayed flow of new orders, with the disruption particularly acute in the soaps and hair color categories.
The disruption also weighed on the profits of toothpaste-maker Colgate Palmolive India and Hindustan Unilever, home of brands such as Dove soaps and Surf Excel detergent.
PEER COMPARISON
|
Valuation (next 12 months) |
Estimates (next 12 months) |
Analysts' sentiment |
||||||||
|
RIC |
PE |
EV/EBITDA |
Price/Sales |
Revenue growth (%) |
Profit growth (%) |
Mean rating* |
# of analysts |
Stock to price target** |
Div yield (%) |
|
|
Godrej Consumer Products Ltd |
(GOCP.NS) |
45.58 |
27.56 |
6.91 |
9.70 |
18.54 |
Buy |
35 |
0.82 |
1.80 |
|
Hindustan Unilever Ltd |
(HLL.NS) |
51.30 |
35.34 |
8.66 |
6.90 |
7.52 |
Buy |
21 |
0.89 |
1.74 |
|
Nestle India Ltd |
(NEST.NS) |
69.60 |
44.47 |
10.46 |
9.89 |
9.66 |
Hold |
37 |
0.99 |
1.03 |
|
Dabur India Ltd |
(DABU.NS) |
43.32 |
31.25 |
6.37 |
7.84 |
10.54 |
Hold |
39 |
0.90 |
1.60 |
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
-- All data from LSEG
-- $1 = 87.8950 Indian rupees
Reporting by Hritam Mukherjee and Ananta Agarwal in Bengaluru; Editing by Janane Venkatraman
Source: Reuters