Shares of Godrej Consumer Products (GCPL) soared 15 per cent to Rs 823.30 on the BSE in intra-day trade on Wednesday after the fast moving consumer goods (FMCG) major announced that Sudhir Sitapati will take over as its managing director (MD) and CEO in October 2021.
Sudhir Sitapati—who spent over two decades at FMCG Hindustan Unilever—is stepping down from the role of executive director of the company’s foods and refreshment (F&R) business.
GCPL’s stock hit a 52-week high, surpassing its previous high of Rs 808, touched on January 21, 2021. It had touched a record high of Rs 979 in September 2018. GCPL is a part of derivative markets future & option segment, and thus the concept of a daily circuit limit does not apply to it.
“Mr. Sitapati comes with impressive experience in heading HUVR’s F&R business and as part of the senior management team in the Detergents business, which has done very well under his tenure and where marketing campaigns in both segments have had a high value impact. His appointment as MD and CEO for five years, as well has his relative young age (mid-40s), gives him adequate time to formulate and implement strategic changes,” Motilal Oswal Securities said in a company update.
The underpenetrated Household Insecticides (HI, around 70 per cent/50 per cent penetration in urban/rural) and Hair Color (around 30 per cent penetration) categories could greatly benefit from Mr. Sitapati’s past experience, where GCPL has struggled to boost penetration, the brokerage firm said.
After more than a decade of being Neutral on the company (downgraded to Neutral in Aug’10), a stand that has been vindicated particularly in the past five years, we are upgrading the stock to Buy. It is admittedly an early call, but if its businesses start to perform and there is further rationality in capital allocation, there could be significant gains for investors, with a significant re-rating as well, Motilal Oswal Securities said.
Meanwhile, GCPL, on Tuesday, reported a 59.13 per cent increase in its consolidated net profit to Rs 365.84 crore for the fourth quarter ended March 2021 (Q4FY21). The company had posted a net profit of Rs 229.90 crore in the Q4FY20. Its net sales during the quarter under review were up by 26.87 per cent to Rs 2,706 crore, against Rs 2,133 crore in the year-ago period.
The management said the company delivered a third consecutive quarter of double-digit sales growth. Ebitda (earnings before interest, tax, depreciation and amortisation) grew by 21 per cent. Consolidated EBITDA margins at 21.2 per cent; decrease of 110 bps year-on-year, driven by drop in India and Latin America & SAARC margins.