In this edition, we have reviewed Gujarat Alkalies and Chemicals and Godrej Consumer Products Limited.
We suggest our reader-investors to HOLD in Gujarat Alkalies and Chemicals and Godrej Consumer Products Limited
We had recommended Gujarat Alkalies and Chemicals (GACL) in volume 33, issue no. 24, dated Oct 29–Nov 11, 2018, under the Cover Story section. The stock was trading at Rs.577 then and was recommended owing to positive financial performance, operational efficiency and competitive edge. GACL is one of the largest caustic soda producers in India. The company has a diversified business with operation in chloralkali and integrated products market as well. The company’s plants in Vadodara and Dahej are in close proximity to raw material suppliers and end-users. GACL also exports to US, Europe, Australia. Africa, China, Middle East and South Asia.
On the consolidated financial front, the company posted net sales of Rs.748.57 crore for Q1FY20, down by 0.57 per cent from Rs.752.85 crore in Q1FY19. The PBT was Rs.227.89 crore, depicting a fall of 12.33 per cent in Q1FY19 from Rs.259.94 crore posted in Q1FY19.
The company witnessed a net profit of Rs.158.8 crore in Q1FY20, a decrease by 13.34 per cent compared to the net profit of Rs.183.25 crore in Q1FY19.
On the annual front, the net sales came in at Rs.3161.38 crore in FY19, up by 35.57 per cent from Rs.2513.89 crore in FY18. The PBT in FY19 incThe company’s net profit in FY19 was Rs.690.19 crore, up by 29.13 per cent from Rs.534.5 crore posted in FY18. Post our recommendation, the stock has fallen by 27.35 per cent. GACL has announced that a meeting of the board of directors will be held on September 27, 2019 to consider, subject to approval of the members of the company, the proposal for split/sub-division of equity shares of the face value of Rs.10 each of the company. We recommend a HOLD.reased by 25.75 per cent to Rs.1016.25 crore from Rs.749.42 crore in FY18.The company’s net profit in FY19 was Rs.690.19 crore, up by 29.13 per cent from Rs.534.5 crore posted in FY18. Post our recommendation, the stock has fallen by 27.35 per cent. GACL has announced that a meeting of the board of directors will be held on September 27, 2019 to consider, subject to approval of the members of the company, the proposal for split/sub-division of equity shares of the face value of Rs.10 each of the company. We recommend a HOLD.
We had previously recommended Godrej Consumer Products Limited (GCPL) in volume 34, issue no. 3, dated January 7–20, 2019, under the ‘Choice Crip’ segment. The stock was trading at Rs.807.65 and was recommended based on attractive valuations and boost in growth of the company due to new product launch. It had also posted strong growth and recovery in key international markets. The company engages in manufacturing personal and household care products such as Cinthol soaps, Good Knight, Hit, Protekt handwash range, etc
On the consolidated financial front for Q1FY20, the company posted net sales of Rs.2330.59 crore which is a decrease by 4.86 per cent compared to net sales of Rs.2449.63 crore for Q1FY19. The PBT decreased by 1.06 per cent to Rs.375.03 crore in Q1FY20 as against Rs.379.06 crore in Q1FY19. The company’s net profit rose by 0.63 per cent to Rs.407.6 crore compared to net profit of Rs.405.04 core in Q1FY19.
Looking at the annual financial trend for FY19, the net sales of the company increased by 3.6 per cent to Rs.10221.07 crore from Rs.9865.90 crore in FY18. PBT increased by 2.28 per cent and stood at Rs.2085.33 crore for FY19 as against Rs.2038.88 crore for FY18. The net profit increased by 43.28 per cent to Rs.2341.53 crore in FY19 from Rs.1634.18 crore in FY18. GCPL recently declared an interim dividend of Rs.2 per share of face value Rs.1 for FY19-20. The PE of the stock is 34.54 based on TTM earnings ending June 19. GCPL recently declared an interim dividend of Rs.2 per share of face value Re. 1 for FY19-20. For recycling and reducing use of plastic, the company will be building a pyrolysis plant at Kalyan in Maharashtra to convert multi-layer plastic (MLP) into liquid fuel. Hence, we recommend a HOLD.
(Closing price as of Sept 09, 2019)