For the Godrej group unit, the pace of recovery in margins in Africa and Indonesia is likely to gather momentum into FY15. This is expected to be a key catalyst to drive the stock price higher, says Nomura
Godrej Consumer Products Ltd (GCPL)'s consolidated net profit in March 2014 quarter declined 29.28% to Rs236.28 crore on 12.19% growth in total income from operations (net) to Rs1,931.52 crore over same period last year.
The March quarter results of Godrej Consumer Products Ltd (GCPL) were in line at the net income level, but the key point is that there will be a recovery in the international business performance, says Nomura in a research note.
Nomura said it expects the pace of recovery in margins for Godrej Consumer in Africa and Indonesia to gather momentum into FY15F, which it believes will be a key catalyst to drive the GCPL stock price higher. The first leg of re-rating from March lows has already come through, but Nomura expects the stock to be a sector outperformer in FY15F.
According to Nomura, growth in the household insecticide business in India will also be a key growth driver; it is expected that the company will deliver strong results in this segment over the next two years.
The GCPL stock currently trades at 22.2x FY16F P/E (EPS: Rs35.4). Nomura maintains its 'Buy' rating on GCPL and raises its target price to Rs885, implying a 13% upside from current levels.
The performance forecast of GCPL is given in the table below:
The current quarter trend in Dabur India is likely to sustain into first half of FY15, which is a key positive as compared to peers where the outlook is more muted, says Nomura
Dabur’s 4QFY14 results showed that it has been more resilient than its competition in a challenging overall market environment. Volume growth in its domestic business has been maintained above the 8% mark, which is significantly higher than peers such as Hindustan Unilever, says Nomura in a research note.
Nomura said, “The current quarter trend is likely to sustain into 1HFY15, which is a key positive as compared to peers where the outlook is more muted. Although visibility on 2HFY15F seems more limited due to a variety of reasons, eg, monsoon, results of the general elections and a revival in GDP growth, we see Dabur as one of the better stocks to own into FY15F as it is likely to deliver above sector average growth.”
Nomura upgraded the Dabur India stock to a 'Buy' recommendation with a target price of Rs200 – 12.5% implied upside from current levels. Dabur India is trading at 22.6x FY16F (EPS Rs7.87) versus the sector average of 23.9x. It is now Nomura's preferred pick in the mid cap universe.
Dabur India's forecasted performance is given in the table below:
For FY14, Everest Industries reported fall in its net profit of Rs9.15 crore due to higher costs and muted sales
Everest Industries, a Delhi-based steel building and building material manufacturer, reported a huge fall in its full year net profit fell mainly on dwindling sales from its its steel buildings business and higher costs of freight (transportation charges) and employee benefits.
For the 12 month to end-March, Everest Industries said its net profit fell 82% to Rs9.15 crore from Rs52.50 crore, while its total revenues, including sales, grew marginally (2%) to Rs1,035.25 crore from Rs1,014.13 crore, a year ago period.
Everest Industries' FY14 total expenditure increased 9% to Rs1,022.12 crore compared with Rs938.40 crore a year ago period. It said during the FY14 freight charges increased 20% to Rs91.02 crore from Rs75.73 crore in a same period year ago. Everest Industries' employee benefit expenditure increased 21% to Rs26.78 crore from Rs22.05 crore a year ago period.
Everest Industries said profitability of its steel buildings business tumbled 65% to Rs45.21 crore from Rs129.44 crore, while its building products profitability grew only 3% to Rs387.31 crore from Rs373.43 crore.
“Managerial remuneration forming part of employee benefits expenses exceeds the limits prescribed under section 198 of the Companies Act, 1956 by Rs2.27 crore and is subject to approval of shareholders and Central Government,” the company said in a regulatory filing.
For the March quarter, Everest Industries said its net profit fell 25% to Rs3.04 crore from Rs4.07 crore, even as its total revenues, including sales, increased 27% to Rs306.48 crore from Rs241.30 crore, same period last year.
Everest Industries declared a dividend of Rs2.50 per share.
Everest Industries closed Wednesday marginally down at Rs155.80 on the BSE, while the 30-share Sensex also ended the day marginally down at 22,417.
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