The numbers tell that Godrej Consumer Products is a solid growth stock
05-05-2014 • About Godrej Consumer Products (
$GODREJCP) • By InTwits
Have you thought about Godrej Consumer Products as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Godrej Consumer Products showed fast growth in the last financial year. The company's revenue surged on 18.6% in FY2014. At the same time the company well managed its profitability and also showed EBITDA growth of 16.0% for the same period.
In the last 3 years Godrej Consumer Products showed fast revenue growth of 27.3% from FY2011 to FY2014 annually. EBITDA surged on 21.7% from FY2011 to FY2014 annually.
Godrej Consumer Products ($GODREJCP) financials for the last 5 years
| mln. INR | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 95,350 | 36,763 | 48,509 | 63,908 | 75,826 |
|---|
| Revenue growth, % | | -61.4% | 32.0% | 31.7% | 18.6% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 4,098 | 6,531 | 8,759 | 10,152 | 11,771 |
|---|
| EBITDA growth, % | | 59.4% | 34.1% | 15.9% | 16.0% |
|---|
| EBITDA margin, % | 4.30% | 17.8% | 18.1% | 15.9% | 15.5% |
|---|
| Net Income | 3,396 | 5,147 | 7,267 | 7,961 | 7,597 |
|---|
| Net Income margin, % | 3.56% | 14.0% | 15.0% | 12.5% | 10.0% |
|---|
| |
| CAPEX | 746 | 13,880 | 1,565 | 2,636 | 1,329 |
|---|
| CAPEX/Revenue, % | 0.782% | 37.8% | 3.23% | 4.12% | 1.75% |
|---|
| Debt | 369 | 20,008 | 18,769 | 24,563 | 23,728 |
|---|
| Cash | 3,052 | 2,269 | 4,640 | 7,596 | 6,353 |
|---|
| Net Debt/EBITDA | -0.7x | 2.7x | 1.6x | 1.7x | 1.5x |
|---|
| |
| ROIC, % | 41.6% | 25.5% | 19.1% | 17.4% | 17.7% |
|---|
| ROE, % | 44.5% | 38.4% | 32.1% | 26.0% | 21.4% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. In the last 3 years EBITDA margin dropped on 2.30 pp from 17.8% in FY2011 to 15.5% in FY2014.
We call Godrej Consumer Products an attractive growth stock as together with the growth it delivers high ROIC at 17.7%. During the last three years it dropped - it was 25.5% in FY2011. For the last three years the average ROIC was 18.1%.
The company's Net Income margin dropped on 2.50 pp from 12.5% to 10% in FY2014. If we look for the longer period Net Income margin dropped on 4 pp from 14% in FY2011 to 10% in FY2014.
Godrej Consumer Products operates at ROE of 21.4%. For the last three years the average ROE was 26.5%.
Capital expenditures (CAPEX)
In FY2014 the company had CAPEX/Revenue of 1.75%. CAPEX/Revenue dropped on 36.0 pp from 37.8% in FY2011 to 1.75% in FY2014. For the last three years the average CAPEX/Revenue was 3.03%.
Leverage (Debt)
Having such a fast growth profile the company keeps medium debt level at 1.5x Net Debt/EBITDA. In the longer period Godrej Consumer Products's leverage dropped on 1.24x from 2.72x in FY2011 to 1.48x in FY2014.
Valuation vs. comparable companies
The company trades at 24.5x EV/EBITDA which is not surprisingly 53.1% higher than 16.0x Personal Products industry avearge calculated based on 21 companies. At the end of trading day today Godrej Consumer Products traded at 35.6x P/E which is 56.3% higher than 22.8x Personal Products peer group avearge calculated on the basis of 4 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Godrej Consumer Products traded at 27.6x EV/(EBITDA-CAPEX) which is 1,480% higher than 1.8x Personal Products peer group avearge calculated on the basis of 4 companies.
Peers in Personal Products
Below you can find Godrej Consumer Products benchmarking vs. other companies in Personal Products industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Hindustan Unilever ($HINDUNILVR) | | -60.1% | 17.0% | 14.5% | 8.4% |
| |
|---|
| Median (1 company) | | -60.1% | 17.0% | 14.5% | 8.4% |
|---|
| Godrej Consumer Products ($GODREJCP) | | -61.4% | 32.0% | 31.7% | 18.6% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Hindustan Unilever ($HINDUNILVR) | 5.8% | 14.0% | 15.2% | 16.0% | 16.6% |
| |
|---|
| Median (1 company) | 5.8% | 14.0% | 15.2% | 16.0% | 16.6% |
|---|
| Godrej Consumer Products ($GODREJCP) | 4.3% | 17.8% | 18.1% | 15.9% | 15.5% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Hindustan Unilever ($HINDUNILVR) | 1.2% | 1.7% | 1.2% | 1.7% | 2.1% |
| |
|---|
| Median (1 company) | 1.2% | 1.7% | 1.2% | 1.7% | 2.1% |
|---|
| Godrej Consumer Products ($GODREJCP) | 0.8% | 37.8% | 3.2% | 4.1% | 1.8% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Hindustan Unilever ($HINDUNILVR) | 108.0% | 96.0% | 99.9% | 114.4% | 133.0% |
| |
|---|
| Median (1 company) | 108.0% | 96.0% | 99.9% | 114.4% | 133.0% |
|---|
| Godrej Consumer Products ($GODREJCP) | 41.6% | 25.5% | 19.1% | 17.4% | 17.7% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top |
|---|
| Hindustan Unilever ($HINDUNILVR) | -0.7x | -0.6x | -0.3x | -0.1x | -0.2x |
| |
|---|
| Median (1 company) | -0.7x | -0.6x | -0.3x | -0.1x | -0.2x |
|---|
| Godrej Consumer Products ($GODREJCP) | -0.7x | 2.7x | 1.6x | 1.7x | 1.5x |
