Citi, ILFS Bullish on Godrej Consumer Products Ltd

Citigroup Research and ETrade owned IL&FS Investmart are bullish on the prospects of Godrej Consumer Products Ltd [GCPL].

GCPL’s 50:50 JV with SCA Hygiene Products, a Swedish consumer and paper goods company, will produce and market baby care and feminine hygiene products in India, Nepal and Bhutan. This development is particularly significant because, SCA group, which has a presence in 90 countries, is a market leader in the global absorbent incontinence products market and has 26% market share. This venture will give GCPL an entry into Rs 8 Billion Indian feminine hygiene market which is also growing at the rate of 12% YoY.

GCPL launched a new soap ‘Vigil,’ which has been priced competitively at Rs11 for a 75gm pack. Priced slightly above ‘Godrej No 1’ within GCPL’s stable, this brand would enable GCPL to participate in the high growth health soap market.

Godrej is expected to report an EPS of Rs 7.75 for FY08 and Rs 8.77 for FY09. Citi has a Low Risk BUY on Godrej Consumer Products Ltd with a Target Price of Rs 195, 31% upside from current levels.