Godrej Consumer Products Ltd. expects to post domestic sales growth of around 30% in the January-March quarter, aided by higher volumes and price increases.
“Sales growth was quite broad-based across key categories of soaps, household insecticides and hair colours. We also witnessed strong sales growth momentum in each of the months within the quarter,” the maker of Good Knight and Hit insect repellants said in its quarterly business update released on the stock exchanges.
Also, demand trends in categories across the key countries the company operates in remained stable during the quarter, it said.
In Indonesia, a key international market, the company expects a gradual recovery with mid-single digit sales growth in constant currency terms. “While macroeconomic variables and a stretched Covid-19 environment continued to pose challenges, we are witnessing gradual recovery in the air fresheners category and are strategically addressing the high competitive intensity in the wet wipes category.”
Growth momentum in Africa, the U.S. and Middle East business continued during the reported quarter. The company expects constant currency sales growth of close to 30% for these markets.
For Latin America, the company expects sales growth to remain strong in constant currency terms.
Its SAARC business also continues to deliver healthy sales growth.
“At a consolidated level, we continue to leverage our category and geographic portfolio well, and expect to deliver constant currency sales growth in the mid-twenties,” the consumer goods maker said in the filing.
Still, Motilal Oswal said the loss of dominance in hair colour, the advent of unorganised incense stick players in household insecticides and weak execution in the Africa business remain areas of worry. “Although close to 30% top line performance in fourth quarter is encouraging, it is on a soft base of 12.2% sales decline in Q4 FY20,” the brokerage said in a note.
Motilal Oswal awaits management commentary to determine the sustainability of this quarter’s performance. “Given the uncertain outlook and inferior Return on Capital Employed versus peers, valuations appear fair,” it said.