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What the management of Godrej Consumer says?

According to the Motilal Oswal report, the management said that the Indonesia business has been seeing gradual recovery in demand post the second COVID wave despite a tough macroeconomic situation.

“Given the recent bold economic reforms implemented by the Indonesian government, the company management is confident that Godrej Consumer Products has the building blocks in place to capitalize on these reforms and deliver double-digit profitable growth over the medium term,” Motilal Oswal has said in its report.

Making strides in the Indonesian markets

Hygiene now accounts for 10% of Godrej Consumer Products – fairly impressive

given Godrej Consumer Products Indonesia’s recent entry into the segment. The management is now leveraging its Saniter brand and moving into personal care categories, such as soaps and personal wash with powder-to-liquid and liquid formats.

Expanding reach

Project RISE at the company seeks to dramatically increase Godrej Consumer Products direct reach as well as SKU throughput per outlet. The company’s direct reach now stands at 160,000 outlets (from 100,000 earlier). It also has a distribution strategy in place using agents/distributors that now cover 40,000-50,000 outlets. The management believes a 200,000 outlet direct reach is ideal.

“The company has been performing well in large categories over the last last year, this comes along with better capital allocation efforts in recent years, the appointment of a new head in the – erstwhile, significantly underperforming – GAUM business (largely Africa), with good initial results in the first year of his tenure in FY21, and potential tailwinds in domestic soap and personal wash products – led by more frequent usage since COVID-19 – and a sharp increase in domestic penetration levels in the Hand Wash category. We maintain a buy with a price target of Rs 1250,” the brokerage has said.

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