Godrej Long Term Buy Call: Abhishek Jain, StocksIdea.com

Godrej Consumer Products Ltd.Godrej Consumer Products Ltd. is a major player in the Indian FMCG market with leadership in personal care, hair care, household care and fabric care segments. Today Godrej is delivering consumers exciting innovations across a spectrum of businesses. The company has state-of-the-art manufacturing facilities at Malanpur (M. P.) Guwahati (Assam), Silvassa (U. T.) and Baddi (H. P.). In 2002 Company entered into the deodorants category with the launch of Cinthol International Perfumed deodorant. Godrej entered the traditional powdered 'henna' market with the launch of powdered henna under the brand 'Nupur'. It has Godrej FairGlow soap brand, one of the largest selling fairness soap. Company has an agreement with Shogun Diapers Ltd. for acquisition of trademark and copyright relating to the brand 'snuggy'. Godrej Consumer Products on Apr. 01, 2008 completed the acquisition of 100% stake in the Kinky Group, South Africa for South African Rand 265 million. Kinky is one of the leaders in the South African hair business, offers s a variety of products which include hair, hair braids, hair pieces, wigs and wafted pieces. Kinky also offers hair accessories like styling gels, hair sprays, oil free shampoo. The products are manufactured at plants Located in South Africa at Johannesburg and Durban and the final products are sold through cash n carry outlets and owned stores. Godrej SCA Hygiene has become a wholly owned subsidiary of GCPL with effect from Apr. 01, 2009. It manufactures and market paper based absorbent hygiene products, specifically sanitary napkins and baby diapers, in India, Nepal and Bhutan. Company's 25 percent of the revenues come from outside India.

Products & Services:

Company manufactures its products into categories like soaps, toiletries, hair care, household care, fabric care, baby care etc. Company is among the largest marketer of toilet soaps in the country with leading brands such as cinthol, fairglow, godrej no. 1, shikakai, vigil, evita. Its Fairglow brand, India's first Fairness soap, has created marketing history as one of the most successful innovations. It is the leader in the hair color category in India and have a vast product range from godrej renew coloursoft, liquid hair colors, godrej liquid & powder hair dyes to godrej kesh kala oil, nupur based hair dyes. Company's Liquid Detergent brand Ezee is the market leader in its category. Company is the preferred supplier of toilet soaps for some of the most well known brands in the country. Company has a state-of-the-art Research Centre based in Mumbai. Company's quality products have been received very well in the international market and it has presence in many countries across the world. Company has adopted the Total Quality Management system and factories have received ISO certifications. Company acquired the Keyline Brands Ltd in October 2005. Keyline operates in the toiletries and personal care sector, and its portfolio includes a number of important niche brands, some of which are household names such as Cuticura, Aapri, Erasmic and Nulon. Personal care division of Godrej Consumer Products comprises toilet soaps, deodorants, cosmetics, shaving cream and talcum powder. The household segment has the Godrej liquid cleaner.

Financials:

Consolidated net profit of the company rose 2.67 times at Rs 9300 Lakhs for the quarter ended Sep. 30, 2009 as compared to Rs 3473 Lakhs for the quarter ended Sep. 30, 2008. Net sales stood at Rs 57,559 Lakhs compared to Rs 34,807 Lakhs in the prior year period registering growth of 65.37% as against the prior year period. Its earnings a share stood at Rs 3.02 a share registering growth 2.24 times over the prior year period.

Valuation:

Godrej Consumer Products (GPCL) has planned up to Rs 10 billion for acquisitions in emerging markets like Asia, Africa and Latin America. The FMCG major has been scouting for companies in the hygiene, personal and hair-care segments. The company may borrow a portion of the funds as and when required. Company is looking for acquisitions of profitable businesses and strong brands that will be its key strategies in strengthening its competitive position and enhancing shareholder value.