14 September 2020
A
nnual
R
eport
T
hreadbare
GODREJ CONSUMER PRODUCTS – FY20
GCPL’s FY20 Annual Report analysis highlights a muted operating
performance. EBITDA increased marginally by 1.2% to INR21.4b,
primarily due to the outbreak of COVID-19. The India and GAUM
(Godrej Africa, US, Middle East) businesses were impacted, while
Indonesia delivered robust growth. The company recognized
exceptional loss of INR.0.8b, primarily on account of the
impairment of goodwill/intangibles. We note that the company
changed the estimates for carrying out the impairment evaluation
of intangibles/goodwill, which stood at INR79.7b – 101% of NW.
GCPL’s earnings to cash flow conversion declined to 90% (FY19:
102%) on account of increased working capital requirements in
India and Africa. OCF post-interest declined to INR14.4b (FY19:
INR15.1b). Standalone RoCE declined to 65% (FY19: 86%) due to a
weak operating performance, coupled with an increase in capital
intensity (financed partially by incremental debt). This led to
consolidated RoCE declining to 18.7% (FY19: 20.1%).
Indonesia supports performance in a challenging
environment:
Indonesia posted healthy 17% EBITDA (adj.)
growth to INR4.5b. Conversely, India EBITDA (adj.) fell 4.2% to
INR14.2b and GAUM EBITDA (adj.) declined 14.6% to INR2.4b.
Declines in India and GAUM were primarily attributable to the
advent of COVID-19 in 4QFY20. For the first three quarters of
FY20, India witnessed (adj.) EBITDA growth of 2% to INR11.2b,
while GAUM EBITDA (adj.) remained flattish at INR2.2b.
Impairment losses recognized; estimates to assess
recoverable value changed:
In FY20, the company recognized
exceptional loss of INR0.8b, primarily on account of
impairment loss on goodwill/intangible assets in Argentina (of
INR0.3b) and Africa (INR0.4b). It also reduced estimates for
discount rates (to 6.67–20.8% from 11.9–24.6% in FY19) and
terminal growth rate (to 2–7% from 3–8% in FY19) during the
year, used for assessing the recoverable value. Furthermore,
the stipulated express forecast period for Africa was increased
to 10 years from 5 years.
Working capital requirements rise:
The consolidated cash
conversion cycle increased to 22 days in FY20 from 16 days in
FY19 due to a rise in the number of inventory days (to 63 days
from 55 days in FY19), primarily in India and Africa. While the
consolidated payable days remained flattish (at 91 days v/s 90
in FY19), it declined significantly in the standalone entity (to 83
days v/s 94 days in FY19). This was more than offset by an
increase in payables for subsidiaries. Over the last few years,
the cash conversion of subsidiaries has improved significantly
(64 days in FY20 v/s 99 days in FY18), largely led by an increase
in payable days (102 days in FY20 v/s 72 days in FY18).
The
ART
of annual report analysis
India /Africa performance
remained muted (ex-
COVID), while it
continued to be robust
for Indonesia.
Intangibles (incl.
goodwill) stood at
INR80b, 1x NW.
Impairment loss of INR0.7b was recognized on
intangibles/goodwill in Africa/Argentina;
impairment estimates have been changed.
Standalone RoCE declined to 65% (FY19: 86%)
on a weak operating performance, coupled
with an increase in capital intensity.
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
GCPL IN
1,022
706.7 / 9.5
772 / 425
-1/12/7
990
Shareholding pattern (%)
Promoter
Jun-20
63.2
Mar-20
63.2
Jun-19
63.3
DII
FII
Others
3.2
26.8
6.8
3.1
26.3
7.3
2.2
28.0
6.6
Note: FII Includes depository receipts
Stock Performance (1-year)
Auditor’s name
B S R & CO LLP
Research analyst
Sandeep Ashok Gupta
(S.Gupta@MotilalOswal.com)
Umesh Jain
(Umesh.Jain@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
ART
|
GCPL FY20
Indonesia supports performance in a challenging environment
Consolidated EBITDA edged
up 1% to INR21.4b as
margins improved 110bps
to 21.6%.
EBITDA (adj.) for India and
GAUM declined 4.7% and
14.6%, respectively;
Indonesia witnessed robust
17% growth.
Consolidated revenues declined 4% to INR99.1b (FY19: INR103.1b). EBITDA
edged up 1% to INR21.4b (FY19: INR21.2b) as margins improved 110bps to
21.6% (FY19: 20.5%). EBITDA margin expansion was primarily driven by
subsidiaries, which saw gross margin expansion, along with a reduction in
employee cost (due to the incentive structure).
Revenues for both the India and international businesses were impacted.
Decline may primarily be attributed to the COVID-19 outbreak in 4QFY20 and
the divestment of the Europe business in Sept’18. (Note that the revenues for
FY19 include revenues for discontinued businesses for part of the year.)
The India business (excluding the impact of COVID-19) witnessed muted (~1%)
revenue growth despite mid-single-digit volume growth in the first three
quarters in FY20. Volume growth was led by new product launches, effective
marketing campaigns, and consumer offers. The muted revenue (despite
volume growth) was partially attributable to a price reduction taken in the
Soaps category during the year (Refer exhibit 5 for details).
Among the international businesses (adjusted for business support, royalty, and
technical fees paid), Indonesia continued to witness healthy growth (revenue:
11%; EBITDA: 17%); on the other hand, GAUM’s performance remained weak
(revenue: -5.8%; EBITDA: -14.6%) due to the COVID-19 crisis and currency
devaluation, in addition to an otherwise muted performance.
Adj. EBITDA margins for the Indonesia business increased to 26.6% in FY20 from
25.3% in FY19, while GAUM’s margins declined to 10.4% in FY20 from 11.5% in
FY19.
PBT before exceptional items remained flattish at INR18.4b (FY19: INR18.3b).
Exhibit 1: Muted performance in a challenging environment (INR b)
Particulars
Standalone
FY20
INR b
%
54.7 100.0
22.5
41.0
32.3
59.0
14.6
26.7
3.2
5.8
14.5
26.4
0.8
1.5
13.7
25.0
0.6
1.1
13.1
23.9
0.9
1.7
14.0
25.6
-
-
14.0
25.6
2.2
4.0
11.8
21.6
FY19
INR b
%
Revenue
56.8 100.0
Raw Materials Consumed
23.1
40.7
Gross Margin
33.7
59.3
Operating and Administrative Expenses 15.0
26.4
Personnel Cost
3.5
6.2
EBITDA
15.1
26.6
Depreciation
0.7
1.2
EBIT
14.4
25.4
Financial Charges
0.6
1.1
EBT
13.8
24.3
Other Income
0.9
1.7
PBT (Before Exceptional Items)
14.7
25.9
Exceptional Items
-
-
PBT
14.7
25.9
Tax
(2.8)
(5.0)
PAT
17.5
30.9
Subsidiary (Derived)
FY19
FY20
INR b
%
INR b
%
46.4 100.0 44.4 100.0
22.4
48.4
20.2
45.4
23.9
51.6
24.2
54.6
10.5
22.6
10.3
23.1
7.4
16.0
7.0
15.8
6.1
13.1
7.0
15.7
1.0
2.2
1.2
2.6
5.0
10.9
5.8
13.1
1.6
3.4
1.6
3.6
3.4
7.4
4.2
9.5
0.1
0.3
0.2
0.5
3.6
7.7
4.4
9.9
2.5
5.4
(0.8)
(1.8)
6.1
13.2
3.6
8.1
0.3
0.6
0.4
1.0
5.9
12.7
3.2
7.1
Consolidated
FY19
FY20
INR b
%
INR b
%
103.1 100.0 99.1 100.0
45.5
44.2
42.6
43.0
57.6
55.8
56.5
57.0
25.5
24.7
24.9
25.1
10.9
10.6
10.2
10.3
21.2
20.5
21.4
21.6
1.7
1.6
2.0
2.0
19.5
18.9
19.5
19.6
2.2
2.2
2.2
2.2
17.2
16.7
17.3
17.4
1.1
1.1
1.1
1.1
18.3
17.8
18.4
18.6
2.5
2.4
(0.8)
(0.8)
20.9
20.2
17.6
17.8
(2.6)
(2.5)
2.6
2.7
23.4
22.7
15.0
15.1
Source: Company Annual Report, MOFSL
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GCPL FY20
Exhibit 2: Revenue growth
Standalone
10.0%
4.3%
6.2%
4.8%
-3.6%
-3.9%
10.8%
8.0%
15.2%
8.7%
2.6%
1.2%
-4.3%
12.4%
10.0%
-1.2%
0.5%
-5.0%
Consolidated
Exhibit 3: EBITDA growth
Standalone
16.0%
17.0%
Consolidated
13.7%
Exhibit 4: PBT growth
Standalone
16.8%
Consolidated
14.3%
16.4%
Source: Company, MOFSL
Source: Company, MOFSL
Before exceptional
Source: Company, MOFSL
Exhibit 5: FY20 revenue growth muted in India
Particulars
Q1
Q2
Q3
Q4
India
Volume
5%
7%
7%
-15%
Value
1%
1%
1%
-18%
International *Consolidated *
Value
Value
3%
2%
4%
2%
3%
2%
-5%
-12%
Exhibit 6: Indonesia’s robust growth supports international
performances
Particulars
Q1
Q2
Q3
Q4
Indonesia
5%
17%
13%
9%
GAUM
1%
-6%
-1%
-16%
Others*
10%
24%
-3%
1%
Total*
3%
4%
3%
-5%
Source: Company, MOFSL
*Adjusted for UK business divested in FY19
Adjusted for royalty, support & tech fee paid to standalone
Exhibit 7: Indonesia’s rev (INR b)…
FY19
FY20
Exhibit 8: …EBITDA (INR b)…
FY19
FY20
Exhibit 9: …and margins improve
FY19
FY20
*Adjusted for UK business divested in FY19
Note: Adjusted for royalty, support &
tech fee paid to standalone
Source: Company, MOFSL
Exceptional loss on impairment recognized
Impairment loss of INR0.7b
was recognized on
intangibles/goodwill in
Africa and Argentina.
In FY20, the company recognized exceptional loss of INR0.8b (FY19: gains of
INR2.5b), primarily on account of impairment losses and restructuring costs.
These impairment losses were recognized on goodwill of INR0.3b in Argentina
and INR0.4b in other indefinite life intangible assets in Africa (including SON).
Back in FY17, GCPL acquired 100% equity stake in Strength of Nature (SON),
manufacturer and marketer of hair care products for women of African descent.
For SON, the total purchase consideration was INR21.0b, comprising: (a) an
initial purchase consideration of INR12.4b and (b) estimated value of earnout
payment of INR8.6b, payable after FY19 (based on future EBITDA multiple).
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GCPL FY20
In FY19 as well as FY18, GCPL wrote back an INR1.9b provision (per year) as
exceptional gains pertaining to the contingent consideration payable to the
sellers of SON LLC on account of change in expected EBITDA estimates.
Exhibit 10: Impairment leads to exceptional loss in FY20 (INR b)
Particulars
Restructuring cost
Gains on divestment of UK business
Impairment loss on goodwill and other intangible assets
Reversal of liability for business combination
TOTAL
FY18
(0.2)
-
-
1.9
1.8
FY19
(0.2)
0.8
-
1.9
2.5
FY20
(0.2)
0.1
(0.7)
-
(0.8)
Source: Company, MOFSL
Goodwill and intangibles remain high
Intangibles (incl. goodwill)
stood at INR79.7b – 101%
of NW.
To assess recoverable value,
the period of express
forecast of cash flows for
Africa CGU was increased to
10 years in FY20 from 5
years in FY19.
GCPL reduced estimates for
discount rates (to 6.67–
20.8% from 11.9–24.6% in
FY19) and terminal growth
rate (to 2–7% from 3–8% in
FY19) during the year.
As a result of increased acquisitions over the past few years, intangibles assets
(including goodwill) have remained high at INR79.7b, 101% of networth (FY19:
INR74.8b; 103% of networth).
Goodwill of INR53.4b and intangibles within definitive life at INR23.4b are not
amortized, but tested for impairment annually.
According to Ind-AS, impairment loss is recognized when the carrying value of
an asset or a cash-generating unit (CGU) exceeds its recoverable amount, where
the recoverable amount is higher for the fair value of assets or CGU or its value
in use.
The recoverable amount of a CGU is based on its value in use. Value in use is
estimated using discounted cash flows over a period of five years for all CGUs,
except Africa. For this CGU, a 10-year period is used to recognize the longer
period of faster growth in expected cash flows, before averaging to a lower pace
of growth to perpetuity.
We note that to assess recoverable value, the period of high growth for the
Africa CGU was increased to 10 years in FY20 from 5 years in FY19. The high-
growth period was followed by a terminal growth rate for discounting estimated
cash flows.
Effective from FY20, the company has presented a more robust disclosure of
estimates (on discount rates, terminal growth, and average growth rate) for
each CGU individually. Up to FY19, disclosures of estimates were made for all
CGUs in a consolidated manner.
On a comparable basis, GCPL in FY20 reduced the range of discount rates (to
6.67–20.8% from 11.9–24.6% in FY19). The growth rate beyond stipulates an
express forecast period (to 2–7% from 3–8% in FY19) for estimating the
recoverable value of the intangible assets.
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GCPL FY20
Exhibit 11: Goodwill and intangibles at 101% of NW (INR b)
Goodwill (INR b)
135%
116%
24.8
46.6
FY17
25.3
47.2
FY18
103%
25.6
49.2
FY19
101%
26.4
53.4
Intangibles Assets Capitalized (INR b)
% of Networth
119%
9.4
41.4
FY16
FY20
Source: Company Annual Report, MOFSL
Exhibit 12: Africa’s indefinite life intangibles were high (INR b) Exhibit 13: Africa’s goodwill remains high (INR b)
Particulars
India
Africa (including SON)
Others
Total
FY16
7.9
-
-
7.9
FY17
7.9
13.0
-
20.9
Particulars
India
Indonesia
Africa (including SON)
Argentina
Source: Company, MOFSL Others
Total
FY18
7.9
13.4
-
21.3
FY19
7.9
14.5
0.1
22.5
FY20
7.9
15.4
0.1
23.4
FY16
0.0
13.0
22.5
3.1
2.9
41.4
FY17
0.0
13.5
27.7
3.0
2.5
46.6
FY18
0.0
13.5
27.9
3.0
2.8
47.2
FY19
0.0
14.5
29.7
3.2
1.8
49.2
FY20
0.0
16.0
32.3
3.2
1.8
53.4
Source: Company, MOFSL
Exhibit 14: Estimates revised to derive fair value of intangibles
Estimates for cash flow projections
Pre-tax discount rate
Long-term growth rate beyond five years
FY16
16.8–26.5%
2–3%
FY17
16.8–26.5%
2–3%
FY18
9.2–21.4%
2–8.6%
FY19
11.9–24.6%
3–8%
FY20
6.67–20.8%
2–7%
Source: Company Annual Report, MOFSL
Exhibit 15: FY20 CGU-wise estimates to determine recoverable value of intangibles
Particulars (CGU and brands)
Indonesia
Africa (including SON)
Argentina*
Others**
Average sales growth
9.5%
0% - 28%
7.3%
1.5% - 17.4%
Pre Tax discount rate
12.2%
6.67% - 18.28%
19.6%
9.54% - 20.80%
Terminal growth rate
6.0%
3% - 7%
2.0%
3% - 5%
* For the current year, the Argentina CGU valuation is performed in USD due to hyperinflationary economy leading to high volatility in local
currency; ** Others Include India, Chile, and Sri Lanka. Source: Company, MOFSL
Rising inventory leads to deterioration in consolidated CCC
Earnings to cash flow
conversion declined to 90%
on rising inventory days.
Earnings to cash flow conversion declined to 90% (FY19: 102%), primarily on
account of an increase in the consolidated cash conversion cycle to 22 days in
FY20 from 16 days in FY19.
The increase was primarily driven by growth in the CCC at the standalone level –
to -15 days in FY20 from -29 days in FY19. This was because the number of
payables days declined to 83 days (FY19: 94 days) and advances extended
increased to 4 days (FY19: 2 days). Inventory days also increased to 44 days
(FY19: 49 days). We believe the decrease in payable days and increase in
advances extended could be to support the suppliers of essential/critical
materials.
The cash conversion cycle at the subsidiary level improved to 64 days (FY19: 72
days), primarily on account of an increase in the cash conversion cycle at the
Indonesian subsidiary. On the other hand, the cash conversion cycle at the rest
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GCPL FY20
Improvement in the cash
conversion cycle at
subsidiaries was led by
rising payable days.
of the subsidiaries increased marginally to 99 days (FY19: 95 days) as inventory
days increased to 110days (FY19: 90 days), partially compensated by a
continued increase in payable days to 101 days (FY19: 91 days).
Indonesia saw significant improvement in the cash conversion cycle to -1 days
(FY19: 23 days). This was largely on account of an increase in payable days to
104 days (FY19: 74 days).
We note that in the last few years, there has been significant improvement in
cash conversion at subsidiaries (64 days in FY20 v/s 99 days in FY18), largely led
by an increase in payable days (102 days in FY20 v/s 72 days in FY18).
Exhibit 16: Earnings to cash flow conversion declines
119.5%
102.6%
102.2%
90.2%
72.3%
FY16
FY17
FY18
FY19
FY20
Source: Company Annual Report, MOFSL
Exhibit 17: Standalone: CCC rises on lower payables
Particulars
Inventory Days
Receivable Days
Payable Days
Cash conversion cycle
Other Advances
Adj. Cash conversion cycle
FY16
42
21
64
-1
1
0
FY17
40
15
80
-25
2
-23
FY18
39
17
99
-43
3
-40
FY19
40
23
94
-31
2
-29
FY20
44
20
83
-19
4
-15
Exhibit 18: GAUM’s inventory leads to increase in
consolidated CCC
Particulars
Inventory Days
Receivable Days
Payable Days
Cash conversion cycle
Other Advances
Adj. Cash conversion cycle
FY16
55
47
62
40
2
42
FY17
54
39
65
28
3
31
FY18
58
46
87
17
7
24
FY19
55
46
90
11
5
16
FY20
63
43
91
15
7
22
Source: Company Annual Report, MOFSL
Exhibit 19: Subsidiaries’ CCCs decline…
Exhibit 20: …on rising payable days at
Indonesia
Exhibit 21: GAUM CCC rises
FY18 FY19 FY20
97 90 110
81 83 74
67 91 101
111 82 83
17 13 16
128 95 99
Derived Subsidiary
FY18 FY19 FY20
Indonesia Business
FY18 FY19 FY20
Subsidiary (ex-Indonesia)
Inventory Days
80
74
86 Inventory Days
37 42 41 Inventory Days
Receivable Days
79
74
70 Receivable Days
76 55 62 Receivable Days
Payable Days
72
85 102 Payable Days
84 74 104 Payable Days
Cash conversion cycle (Days)
87
63
54
Cash conversion cycle (Days)
29 23
-1
Cash conversion cycle (Days)
Other Advances
12
9
10 Other Advances
0
0
0 Other Advances
Adj Cash conversion cycle
99
72
64
Adj Cash conversion cycle
29 23
-1
Adj Cash conversion cycle
* Excluding related party transactions
Source: Company Annual Report, MOFSL
Operating cash flows decline on rising working capital requirements
Consolidated operating cash flows (OCF) post interest declined to INR14.4b
(FY19: INR15.1b), primarily led by standalone operations (OCF declined to
INR8.6b v/s INR10.1b in FY19), due to an increase in working capital
requirements.
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GCPL FY20
Consolidated OCF post-
interest declined (to
INR14.4b v/s INR15.1b in
FY19) on the back of the
standalone entity;
subsidiaries partially offset
the impact.
Subsidiaries’ OCF improved to INR5.8b (FY19: INR5.0b), led by improved
operating performance in the Indonesian subsidiary and decline in the cash
conversion cycles of the subsidiaries.
We note that in FY19, GCPL disbursed an earnout liability pertaining to the SON
acquisition (at INR4.3b) and realized the divestment of the UK business (at
INR2.8b).
In FY20, GCPL acquired an additional 5% stake (increased to 95%) in Darling
Group for INR1.9b.
Free cash flows post interest declined to INR11.1b (FY19: INR11.6b) due to
decline in capex and payouts for business acquisition.
Exhibit 22: Rising CCC dents operating cash flows (INR b)
Particulars
PBT (Operations)
Add/(Less): Non-cash adjustments
Less: Direct taxes paid
Operating profit before w/cap changes
Inventories
Trade receivables
Loans and advances
Trade and Other payables
Current liabilities and provisions
Cash generated from operations before exceptional Items
Add/(Less): Exceptional Items
Cash generated from operations
Less: Financial cost
Cash generated from operations post interest
Less: Capital expenditure
Less: Business Acquisition
Add: Divestment of business unit
Free cash flows post interest
Standalone
FY19
FY20
14.7
14.0
0.6
0.9
(3.2)
(2.6)
12.1
12.3
(0.4)
(0.5)
(1.1)
0.6
(0.0)
(0.0)
0.2
(2.6)
(0.1)
0.2
10.8
9.2
-
-
10.8
9.2
(0.7)
(0.6)
10.1
8.6
(0.8)
(0.8)
-
-
-
-
9.3
7.7
Subsidiary (derived)
Consolidated
FY19
FY20
FY19
FY20
3.6
4.4
18.3
18.4
2.9
2.7
3.5
3.6
(1.1)
(0.8)
(4.4)
(3.4)
5.4
6.3
17.5
18.6
0.2
(1.3)
(0.2)
(1.8)
(0.7)
0.8
(1.7)
1.3
(0.0)
(0.0)
0.0
(0.0)
2.6
1.6
2.7
(1.0)
(1.2)
(0.2)
(1.4)
0.0
6.6
6.8
17.5
16.0
(0.2)
(0.1)
(0.2)
(0.1)
6.5
6.7
17.3
15.9
(1.5)
(0.9)
(2.1)
(1.5)
5.0
5.8
15.1
14.4
(1.3)
(0.7)
(2.1)
(1.5)
(4.3)
(1.9)
(4.3)
(1.9)
2.8
0.1
2.8
0.1
2.3
3.3
11.6
11.1
Source: Company Annual Report, MOFSL
Return ratios trend lower as asset turns continue to decline
Standalone RoCE declined
significantly to 65% in FY20
from 86% in FY19 on a weak
operating performance and
rising capital intensity.
Standalone RoCE declined significantly to 65% in FY20 from 86% in FY19 on
weak operating performance and rising capital intensity. We note that the
company’s current investments have increased by INR1.6b, primarily in deposits
of NBFCs. The company also witnessed an increase in working capital
requirements.
Standalone RoE (adjusted for one-offs of MAT recognition) declined to 57%
(FY18: 63%). Asset turns continued to decline to 1.45x (FY18: 1.51x); effective
tax rate for the standalone entity increased. This, along with deteriorating
profitability, led to adj. consol. RoE decline of 700bp YoY to 21%.
Consol. pre-tax RoCE declined to 18.7% (FY19: 20.1%) and remains lower than
standalone RoCE of 65.3% due to higher capital intensity and the relatively
weaker operating performances of its subsidiaries.
Segmental analysis highlighted that RoCE for the India business declined to 53%
(FY19: 53%). The international business remains low in terms of RoCE.
Conversely, RoCE increased for the Indonesia subsidiary (at 18% in FY20 v/s 16%
in FY19), but declined for GAUM (at 3% in FY20 v/s 4% in FY19).
14 September 2020
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 Motilal Oswal Financial Services
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GCPL FY20
Exhibit 23: S/A asset turns decline to a five-year lows
Particulars
NP Margins (%)
Assets Turns (x)
Equity Multiplier (x)
RoE (%)
FY16
15%
1.77
2.1
57%
FY17
17%
1.71
2.2
63%
FY18
19%
1.55
2.3
68%
FY19
20%
1.51
2.0
63%
FY20
21%
1.45
1.9
57%
Exhibit 24: Consol. asset turns take toll
Particulars
NP Margins (%)
Assets Turns (x)
Equity Multiplier (x)
RoE (%)
FY16
13%
0.92
2.2
27%
FY17
14%
0.81
2.4
27%
FY18
15%
0.72
2.3
25%
FY19
14%
0.72
2.1
22%
FY20
16%
0.69
1.9
21%
Source: Company Annual Report, MOFSL
Source: Company Annual Report, MOFSL
Exhibit 25: RoE moderates due to muted performance
ROE - Consolidated*
56.7%
63.1%
ROE -Standalone*
62.8%
56.9%
Exhibit 26: Subsidiaries drag otherwise superior S/A RoCE
ROCE - Consolidated*
78.6%
80.6%
86.3%
ROCE - Standalone*
86.3%
65.3%
67.6%
27.1%
27.3%
25.2%
21.5%
20.8%
22.8%
22.3%
21.1%
20.1%
18.7%
FY16
FY17
FY18
FY19
FY20
FY16
FY17
FY18
FY19
FY20
* Adjusted to exceptional gain and one-time MAT benefit
Source: Company Annual Report, MOFSL
Exhibit 27: RoCE declines across geographies, ex-Indonesia
(%)
71%
53%
FY19
FY20
Exhibit 28: EBIT: Indonesia rises; India/Africa drag (INR m)
14,183
India
Indonesia
GAUM
13,428
Others
16% 18%
3,635
4,270
2,213
1,644
(235)
98
4%
3%
-2%
1%
India
Indonesia
GAUM
Others
FY19
FY20
*Adjusted for inter-geography payment; Source: Company Annual
Report, MOFSL
*Adjusted for inter-geography payment; Source: Company Annual
Report, MOFSL
Net debt rises; high payout maintained for 2
nd
consecutive year
GCPL’s debt rose to
INR35.2b (FY19: INR33.88b)
as it raised short-term debt
– commercial paper of
INR2.5b and working capital
debt of INR0.7b.
GCPL’s net debt rose to INR20.9b (FY19: INR19.8b) as gross debt increased (to
INR35.2b v/s INR33.8b in FY19) on the raising of short-term debt – commercial
paper of INR2.5b and working capital debt of INR0.7b.
Borrowing cost declined 30bps to 4.5%. However, yield on cash investments was
still higher at 7.9%, leading to positive carry.
Although dividend payout (as a percentage of OCF post-interest) declined YoY to
69% (FY19: 98%), it remained healthy.
14 September 2020
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 Motilal Oswal Financial Services
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GCPL FY20
Exhibit 29: Net debt rises (INR b)
Net Debt
0.5
0.4
0.3
0.3
0.3
Net Debt / Equity
(x)
8.4%
5.5%
5.7%
6.5%
7.9%
4.5%
4.8%
19.6
FY16
21.7
FY17
15.6
FY18
19.8
FY19
20.9
FY20
Exhibit 30: Spread between yield and finance cost rises
Yield
Borrowing cost
2.9%
FY16
3.3%
FY17
3.2%
FY18
FY19
FY20
Source: Company Annual Report, MOFSL
Source: Company Annual Report, MOFSL
Exhibit 31: Investments in deposits of NBFCs increase (INR b)
Consolidated
Cash (A)
Non-current Investments
Investments in Deposits with Non-Banking Financial
Companies
Investments in Non-convertible Debentures with
Non-Banking Financial Companies
Godrej Industries Ltd.
Investment in associates
Total Non-current Investments (B)
Current Investments
Investments in Mutual Funds
Investments in Deposits with Non-Banking Financial
Companies
Investments in Commercial Papers
Investments in Non-convertible Debentures with
Non-Banking Financial Companies
Total Current Investment (C)
Cash And Investments
As a % of Net Worth
FY16
7.5
-
-
0.0
0.3
0.3
0.7
0.8
FY17
9.1
0.6
1.5
-
0.4
2.5
4.5
1.7
FY18
9.6
0.2
0.8
-
0.4
1.4
1.2
3.1
1.0
-
1.5
9.4
22%
0.5
6.8
18.5
35%
3.4
8.6
19.6
31%
FY19
8.9
-
-
-
0.3
0.3
0.2
1.4
-
3.3
4.8
14.1
19%
FY20
7.7
-
-
-
0.3
0.3
0.0
5.6
-
0.8
6.4
14.4
18%
Source: Company Annual Report, MOFSL
Exhibit 32: Dividend payout remains healthy (INR b)
Dividend paid
17.4
OCF Post Interest
15.7
98%
%
15.1
14.4
69%
7.3
47%
14%
Cash and investments
decreased to INR14.4b –
18% of networth.
31%
2.3
FY16
2.4
FY17
7.4
FY18
14.8
FY19
9.9
FY20
Source: Company Annual Report, MOFSL
14 September 2020
9
 Motilal Oswal Financial Services
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GCPL FY20
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
> - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In
case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days,the Research Analyst shall within following 30 days take appropriate measures to make the recommendation consistent
with the investment rating legend.
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock broking services,
Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which
are available on
www.motilaloswal.com.
MOFSL (erstwhile Motilal Oswal Securities Limited - MOFSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of India Ltd. (NSE) and
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and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be
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other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures.
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to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory
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Disclosure of Interest Statement
Analyst ownership of the stock
GODREJ CONSUMER
No
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www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and Technical Research. Proprietary trading desk of MOFSL or its
associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity and therefore it can have an independent view with regards to subject company for which Research Team have expressed their
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who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.
CIN No.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate
Agent: CA0579; PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products
and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of
MOFSL. Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is
subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOFSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law Tribunal, Mumbai Bench.
14 September 2020
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