GCPL

GCPL|1QFY2011 Result Update
July 26, 2010

Godrej Consumer Products BUY
CMP Rs341
Performance Highlights Target Price Rs397
(Rs cr) 1QFY11 1QFY10 % yoy Angel Est % Diff Investment Period 12 Months
Revenue 643.1 438.9 46.5 600.0 7.2
EBITDA Stock Info
119.1 86.4 37.9 126.0 (5.4)
OPM (%) 18.5 19.7 (117) 21.0 (248) Sector FMCG
PAT 76.1 69.7 9.2 98.3 (22.6) Market Cap (Rs cr) 11,066
Source: Company, Angel Research; Note: Our estimates do not include the recent acquisitions Beta 0.3
52 Week High / Low 396/196
Godrej Consumer (GCPL) posted disappointing set of numbers for 1QFY2011.
While consolidated top-line growth was strong at 47% led by the recent Avg. Daily Volume 51,046
acquisitions, domestic revenue growth (ex-GHPL) declined 7% yoy. Recurring Face Value (Rs) 1.0
earnings grew a muted 9% yoy impacted by gross margin contraction, higher
interest costs and spike in the tax rate. Post consolidation of the recent BSE Sensex 18,020
acquisitions and significant clarity on the same, we have re-cast our numbers Nifty 5,419
modeling in financials from all recent acquisitions. Hence, our previous and
Reuters Code GOCP.BO
current estimates are strictly not comparable. We upgrade the stock to a Buy.
Bloomberg Code GCPL@IN
Recent acquisitions drive growth, recurring earnings growth disappoints: For
1QFY2011, GCPL reported strong top-line growth of 47% yoy to Rs643cr driven
largely by consolidation of the recent acquisitions (Megasari, Tura, Issue and Shareholding Pattern (%)
Argencos) and remaining 51% consolidation of GHPL. The domestic business
Promoters 71.4
(including GHPL) registered 35% yoy growth to Rs457cr. However, the domestic
business (ex-GHPL) fell 7% yoy as soaps registered ~9% yoy decline (on high MF /Banks /Indian FIs 3.0
base and inventory de-stocking) and hair colours registered muted 4% yoy FII /NRIs /OCBs 18.9
growth. The international business revenues grew 84% yoy to Rs186cr aided by
consolidation of Megasari and Issue. GCPL’s recurring earnings registered muted Indian Public /Others 6.7
growth of 9% yoy to Rs76cr impacted by margin contraction, spike in interest
costs, higher depreciation and rise in the tax rate. However, reported earnings
registered 67% yoy growth to Rs116cr aided by Rs40cr exceptional income on Abs. (%) 3m 1yr 3yr
account of compensation received by GHPL from P&G for Ambi-Pur.
Sensex 1.5 17.2 14.2
Outlook and Valuation: At the CMP of Rs341, the stock is trading at attractive GCPL 14.5 64.3 143.2
valuations of 18.9x FY2012E earnings, given its robust earnings growth. We
upgrade the stock to Buy from Accumulate, with a revised Target Price of Rs397
(Rs357), based on 22x FY2012E earnings, modeling in our revised estimates post
consolidation of the recent acquisitions.

Key Financials (Consolidated)
Y/E March (Rs cr) FY2009 FY2010 FY2011E FY2012E
Net Sales 1,393 2,041 3,506 4,263
% chg 26.3 46.5 71.8 21.6
Adj Net Profit 172.6 339.6 463.8 583.4
% chg 8.4 96.7 36.6 25.8
EBITDA (%) 14.9 20.0 18.8 19.1
EPS (Rs) 5.3 10.5 14.3 18.0 Anand Shah
P/E (x) 63.9 32.5 23.8 18.9 022-4040 3800-334
P/BV (x) 15.3 11.0 6.3 5.2 anand.shah@angeltrade.com
RoE (%) 46.6 44.5 34.2 30.1
Chitrangda Kapur
RoCE (%) 30.8 41.5 29.1 22.6
022-4040 3800-323
EV/Sales (x) 7.8 5.3 3.5 2.9
chitrangdar.kapur@angeltrade.com
EV/EBITDA (x) 52.8 26.4 18.6 15.0
Source: Company, Angel Research
Please refer to important disclosures at the end of this report 1


Exhibit 1: Quarterly performance

Y/E March (Rs cr) 1QFY11 1QFY10 % yoy FY2010 FY2009 % chg
Net Sales 643.1 438.9 46.5 2,041.2 1,393.0 46.5
Consumption of RM 316.8 202.2 56.7 946.3 769.5 23.0
(% of Sales) 49.3 46.1 46.4 55.2
Staff Costs 43.9 37.3 17.5 187.7 87.6 114.4
(% of Sales) 6.8 8.5 9.2 6.3
Advertising 65.1 43.3 50.2 172.1 99.7 72.5
(% of Sales) 10.1 9.9 8.4 7.2
Other Expenses 98.2 69.6 41.1 327.8 232.4 41.0
(% of Sales) 15.3 15.9 16.1 16.7
Total Expenditure 524.0 352.4 48.7 1,633.9 1,189.3 37.4
Operating Profit 119.1 86.4 37.9 407.3 203.7 99.9
OPM (%) 18.5 19.7 20.0 14.6
Interest 10.5 3.8 11.1 20.1
Depreciation 8.4 5.2 61.8 23.6 19.2 22.7
Other Income 10.6 10.1 4.4 47.3 44.8 5.6
PBT (excl. Extr. Items) 110.8 87.6 26.5 419.9 209.2 100.7
Extr. Income/(Expense) 40.3 0.0 0.0 0.0
PBT (incl. Extr. Items) 151.2 87.6 72.5 419.9 209.2 100.7
(% of Sales) 23.5 20.0 20.6 15.0
Provision for Taxation 34.8 17.9 94.0 80.3 36.0 123.4
(% of PBT) 23.0 20.5 19.1 17.2
Recurring PAT 76.1 69.7 9.2 339.6 173.3 96.0
PATM (%) 11.8 15.9 16.6 12.4
Reported PAT 116.4 69.7 67.0 339.6 173.3 96.0
Equity Shares (cr) 30.8 25.7 30.8 25.7
EPS (Rs) 3.8 2.7 39.3 11.0 6.7 63.4


Top-line growth driven by consolidation of recent acquisitions

GCPL reported strong 47% yoy growth in top-line for 1QFY2011 to Rs643cr
(Rs439cr) driven largely by consolidation of the recent acquisitions (Megasari, Tura,
Issue and Argencos) and remaining 51% consolidation of GHPL.

The domestic business (including GHPL’s additional 51% consolidation for six weeks,
less Rs116cr dividend income to GCPL from GHPL) registered 35% yoy growth to
Rs457cr (Rs338cr). However, on a like-to-like basis, domestic business (without
GHPL) registered 7% yoy decline and GHPL registered strong 28% yoy growth. Soaps
registered ~9% yoy decline on high base and inventory de-stocking, while hair
colours registered muted 4% yoy growth during the quarter. Management has
indicated that the de-stocking process in soaps on-going since the last two quarters is
over and growth is likely to rebound in 2HFY2011.

International business revenues stood at Rs186cr (Rs101cr), registering 84% yoy
growth aided by Rs83cr revenues from Megasari (consolidated for six weeks) and
Rs12cr revenue from Issue (consolidated only for one month).

July 26, 2010 2


Exhibit 2: Top-line growth strong at 47% yoy... Exhibit 3: ...driven by recent acquisitions
700 70.0 210 100.0
600 60.0
80.0
160
500 50.0
60.0

(yoy %)
400 40.0

(Rs cr)
(Rs cr)

(%)
110
300 30.0 40.0
200 20.0
60
20.0
100 10.0
- - 10 -
1QFY09 3QFY09 1QFY10 3QFY10 1QFY11 1QFY09 3QFY09 1QFY10 3QFY10 1QFY11
Top-line (LHS) YoY growth (RHS) Int Bus sales (LHS) YoY growth (RHS)

Source: Company, Angel Research Source: Company, Angel Research

Exhibit 4: Domestic growth dips into red... Exhibit 5: ...but consolidation of GHPL saves the day
360 40.0 170
310 150
30.0
260 130
20.0 110
210
(Rs cr)

(Rs cr)
(%)

90
160 10.0 70
110 50
-
60 30
10 (10.0) 10
1QFY09 3QFY09 1QFY10 3QFY10 1QFY11 2QFY10 3QFY10 4QFY10 1QFY11
Domestic sales (LHS) YoY growth (RHS)


Gross margins contract, recurring earnings disappoint

GCPL’s recurring earnings registered muted growth of 9% yoy to Rs76cr (Rs70cr)
impacted by margin contraction, 178% yoy spike in interest costs to Rs10.5cr
(Rs3.8cr), 62% yoy jump in depreciation to Rs8.4cr (Rs5.2cr) and 254bp rise in tax
rate. However, on a reported basis, earnings registered a growth of 67% yoy to
Rs116cr (Rs70cr) largely aided by Rs40cr exceptional income on account of
compensation received by GHPL from P&G for Ambi-Pur.

Exhibit 6: Reported PAT up 67% yoy, recurring PAT up a muted ~9%
130 180.0
160.0
110 140.0

90 120.0
100.0
(Rs cr)

(yoy %)

70 80.0
60.0
50
40.0
30 20.0
-
10 (20.0)
1QFY09 3QFY09 1QFY10 3QFY10 1QFY11

PAT (LHS) YoY growth (RHS)


July 26, 2010 3


At the operating front, GCPL witnessed margin contraction of 117bp yoy on account
of the 319bp contraction in gross margins largely due to input cost pressures in the
soaps business. Nonetheless, the 58bp drop in other expenses and 168b dip in staff
costs (on account of lower variable remuneration) arrested further margin erosion.

Exhibit 7: OPM contracts due to input cost pressures Exhibit 8: Ad spends up 50% yoy in absolute terms
60.0 53.9 52.8 52.5 55.5 70 12.0
49.3 50.7
45.5 43.2
50.0 40.9 60 10.0
40.0 50 8.0

(Rs cr)
30.0

(%)
40 6.0
19.6 19.7 19.4 19.6 21.1 18.5
(%)

20.0 14.0 11.9 13.1 30 4.0
10.0 20 2.0
- 10 -
OPM Gross Margin Absolute ASP (LHS) ASP as % of sales (RHS)


Soaps revenue declines ~9%, hair colour growth muted at ~4%

GCPL’s soaps business declined ~9% largely owing to: 1) high base effect
(1HFY2010 saw high growth due to over-stocking at trade levels on anticipation of
strong growth), 2) inventory de-stocking at wholesale trade level, and 3) negative
value growth. The company continued to be the second largest toilet soaps player in
India increasing its market share to 10.4% from 9.8% in June 2009 (flat
sequentially). Management has clearly indicated that competitive intensity in soaps
has intensified from both HUL (renewed portfolio) and ITC (has gained market share
to ~5%). Moreover, higher food inflation and fading effects of price hikes coupled
with higher competitive intensity are likely to see moderation in the segment
revenues. However, management is confident of strong up-tick in growth in
2HFY2010.

The hair colour business registered ~4% yoy growth, the second consecutive quarter
of low-single digit growth owing to negative value growth and pressure on volume.
GCPL improved its market share in the category by 110bp yoy and 90bp qoq to
34%.

Exhibit 9: Soaps - Revenue declines on de-stocking Exhibit 10: Hair colour - Second quarter of low growth
260 50.0 90 60.0
40.0 80 50.0
210
30.0 70 40.0
160 60
20.0 30.0
(Rs cr)

(Rs cr)
(%)

(%)

50
110 10.0 20.0
40
- 30 10.0
60
(10.0) 20 -
10 (20.0) 10 (10.0)
Soaps revenue (LHS) YoY growth (RHS) Hair colours revenue (LHS) YoY growth (RHS)


July 26, 2010 4


International business grows 84% yoy due to recent acquisitions

The international business registered strong 84% yoy growth (89% yoy adjusted for
currency fluctuations, weakness in GBP) and currently accounts for 29% of total
consolidated revenues. Growth in the international business was largely driven by
consolidation of Rs83cr revenue from Megasari (consolidated for six weeks) and
Rs12cr revenues from Issue (consolidated only for one month). We estimate
contribution from Tura was marginal (consolidated for only two weeks) and Argencos
will be consolidated from 2QFY2011.

In terms of profitability, the international business registered PBT of Rs19cr (~10%
PBT margin). Management has re-iterated that all the recent acquisitions have been
EPS accretive and expect an addition of Rs60cr in PAT (post deduction of interest
cost).

UK: Keyline brands registered 21% decline in revenues to Rs53cr (Rs67cr) partly
on account of currency fluctuation (weak GBP). EBITDA for the quarter stood at
Rs7cr.
Asia: Megasari registered revenue of Rs83cr with EBITDA of Rs14cr (EBITDA %
before payment of technical fee to GCPL stood at 21%). Megasari continues to
enjoy its number two position in the household insecticides market and
leadership position in air care and wipes markets in Indonesia. GGME registered
flat yoy revenues of Rs4cr during the quarter.
Africa: Sales from the African region registered growth of 13% yoy to Rs34cr
(Rs30cr) and EBITDA of Rs6cr driven by steady growth in both Rapidol and
Kinky. Tura’s acquisition was completed only on June 16, 2010 and contributed
marginally this quarter.
Latin America (LatAm): GCPL completed the acquisition of the Issue group on
June 1, 2010, which contributed Rs12cr to 1QFY2011 top-line. However,
acquisition of Argencos was completed only on July 8, 2010 and will contribute
from 2QFY2011.

Exhibit 11: Strong growth in international business driven by consolidation of Megasari and Issue
Y/E Mar (Rs cr) 1QFY11 1QFY10 % chg Comments
UK (Keyline Brands) 53.0 66.9 (20.8)
Asia (Megasari & GGME) 87.0 4.0 - Megasari consolidated post May 17;
Africa (Rapidol, Kinky & Tura) 34.0 30.1 13.0 Tura consolidated for only 2 weeks
LatAm (Issue & Argencos) 12.0 - - Only Issue consolidated for one month
Total Sales - Subsidiaries 186.0 101.0 84.2

Update on recent acquisitions

In May and June 2010, GCPL completed acquisitions of the Megasari Group in
Indonesia and the Issue Group in Argentina, as well as the Tura brand in Nigeria. In
addition, in May 2010, GCPL acquired the remaining 51% of Godrej Household
Products (GHPL), erstwhile Godrej Sara Lee. More recently, in July, 2010 GCPL
completed acquisition of another Latin American company, Argencos.

To finance its recent acquisitions, GCPL has incurred an aggregate of US $350mn
debt at interest rates of LIBOR plus between 150bp to 175bp under three loan
facilities and Rs700cr debt under an unsecured redeemable convertible debentures
program. Further, GCPL recently completed a QIP raising Rs531cr by issuing 1.54cr
shares at the issue price of Rs345 leading to equity dilution of ~4.8%. It intends to
use the entire QIP proceeds in redemption of NCDs.

July 26, 2010 5


Exhibit 12: GCPL completes five acquisitions in last three months amounting to Rs2,550cr
Company Category Acquisition Funding Consolidation Sales
Cost (Est) Mode Date (Rs cr)
Tura Medicates Soaps, Undisclosed 16-Jun-10 70
Internal accruals/debt
(Nigeria) Creams & Lotions (Est ~Rs100cr)
Megasari Insecticides Undisclosed 17-May-10 550
Low cost offshore debt
(Indonesia) (Est ~Rs1,200cr)
GHPL (51%) Insecticides 185mn Euros 28-May-10 940
QIP, NCDs
(India) (Rs1,050cr)
Issue & Argencos Hair colour US$43mn 1-Jun-10 (Issue) 200
Internal accruals/debt
(Latin America) (Rs200cr) 8-Jul-10 (Argencos)
Total Funding Rs2,550cr 1,300#
Source: Company, Angel Research ; Note: #Considering additional top-line of ~51% in GHPL to be consolidated

GHPL: Erstwhile Godrej Sara Lee, now GHPL is a leading player in insecticides
with 33% market share through its products like Good Knight, Hit and Jet.
Besides insecticides, it is also present in other categories like hair gels
(Brylcreem), air fresheners (Ambi-pur), shoe polish (Kiwi) and scourers (Kiwi
Kleen). During FY2010, GHPL registered revenue of Rs930cr (23% yoy growth)
and PAT of Rs137cr (31% yoy growth).

Megasari group (Indonesia): Established in 1996, Megasari manufactures a
wide range of household products, with the key focus segments being
insecticides, wet tissues and air fresheners. The company is driven by an
extensive distribution network and ubiquitous brands with strong consumer
equity - Hit, Stella and Mitu are household names in Indonesia (contribute ~
72% of the group's turnover). It has 35% market share for household insecticides
(US $150mn market, with 24% CAGR), making it the second biggest player in
the country. It is Indonesia's biggest producer of wipes (US $21mn market, with
45% CAGR) and air-care products (US $68mn market, with a 45% CAGR), with
a market share of 80% and 45%, respectively. In CY2009, Megasari registered
turnover of US $120mn (Rs550cr) and net profit of Rs47cr.

Tura (Nigeria): Tura, a leading African beauty company, established in 1986 has
a highly effective sales and distribution network achieving an over 70% net
distribution reach. Tura manufactures and distributes a range of products
including soaps, moisturising lotions and skin-toning creams and has its own
high quality soap manufacturing facility in Nigeria. It’s medicated bar soap is
amongst the top three in its category in Nigeria. Tura registered turnover of
N1,635mn in FY2009 equating to ~Rs50cr.

Issue (Argentina): Issue Group includes two companies – Laboratoria Cuenca
(Issue Uruguary) and Consell SA (Issue Brazil). The Issue brand is present in hair
colours segment and enjoys volume leadership in Argentina with a market share
in excess of 20%. The hair colourants market in Argentina is estimated to be
around US$ 200mn and growing at a CAGR of more than 22% over the last two
years. It registered revenues of US $33mn in CY2009.

Argencos (Argentina): GCPL acquired another Argentinean hair care company,
Argencos, making it the company's second buyout in Latin America. Argencos is
present in the hair care business in segments like colour treatment, shampoos
and conditioners and holding products via its brands like Roby, 919 and L’eau
Vive. It registered revenues of ~$10mn in CY2009.

July 26, 2010 6


Investment Rationale

EPS accretive acquisitions to drive 28% CAGR in earnings over FY2010-12E:
Management has constantly re-iterated that all its recent international
acquisitions have been EPS accretive and expect addition of Rs60cr to PAT (post
deduction of interest cost). Consolidation of the additional 51% stake in GHPL is
also likely to be EPS accretive by ~8-10%. Over FY2010-12E, we expect GCPL
to post 28% CAGR in earnings (post dilution of ~5% through recent QIP issue)
driven largely by consolidation of recent acquisitions.

Dependence on soaps to decline, home care to emerge as largest category:
Over FY2010-12E, we expect contribution of soaps to total consolidated
revenues to decline from 42% to 25% and home care to increase from 23.5% to
47% aided by consolidation of Megasari and additional 51% consolidation of
GHPL. We believe the shift in revenue mix is likely to help GCPL de-risk its
dependence on highly competitive soaps market and increase focus on
the high-margin, high-growth insecticides business.

Synergistic benefits and cross-pollination opportunities hold upside risks: We
believe there exists significant synergistic benefits in terms of distribution and
supply chain networks through integration of GHPL, which is likely to reflect over
FY2011-12E. Moreover, GHPL’s strong presence in the south complements
GCPL’s strong presence in North India extremely well given GCPL’s balanced
presence. Moreover, cross-pollination opportunities from its recent international
acquisitions hold upside risks to our estimates.

Outlook and Valuation

Post consolidation of the recent acquisitions and significant clarity on the same, we
have re-cast our numbers modeling in financials from all recent acquisitions. Hence,
our previous and current estimates are not strictly comparable.

Exhibit 13: Change in estimates
Parameter Old Estimate New Estimate % chg
(Rs cr) FY11E FY12E FY11E FY12E FY11E FY12E
Revenue 2,420 2,742 3,506 4,263 44.9 55.5
OPM (%) 19.9 20.2 18.8 19.1 (113bp) (111bp)
EPS (Rs) 12.6 14.3 14.3 18.0 13.7 26.1

During FY2010-12E, we expect GCPL to post strong CAGR of 45% in consolidated
revenues driven largely by consolidation of the recent acquisitions. We have modeled in
robust 28% CAGR in domestic revenues (driven by 100% consolidation of GHPL, expect
up-tick in soaps in 2HFY2011E) and 103% CAGR in international revenues. In terms of
margins, we have modeled in 90bp contraction largely due to input cost pressures in
soaps and contribution from the low-margin acquisitions of Tura, Issue and Argencos
(estimate ~15% OPM in these businesses). Hence, we expect GCPL to post robust 28%
CAGR in earnings during the period (post ~5% dilution due to the recent QIP) after
modeling in: 1) 5% interest cost on higher debt (US $350mn offshore debt, Rs700cr
NCDs), 2) higher depreciation due to consolidation of recent acquisitions, and 3) higher
tax rate due to increase in MAT.

At the CMP of Rs341, the stock is trading at 18.9x FY2012E earnings, which is
attractive given its robust earnings growth. We upgrade the stock to a Buy from
Accumulate, with a revised Target Price of Rs397 (Rs357), translating into 22x
FY2012E earnings, modeling in our revised estimates post consolidation of the
recent acquisitions.

July 26, 2010 7


Exhibit 14: Key Assumptions – Revenue breakup
FY2009 FY2010 FY2011E FY2012E CAGR# Comments
A) Soaps 705 824 895 975 8.8 Expect up-tick in 2HFY2011
B) Hair Colours 227 269 305 335 11.7
C) Toiletries 62 83 104 125 22.5
D) Liquid Detergents 43 53 59 64 10.0
E) By-Products 43 24 21 22 (5.5)
F) GHPL - 409 939 1,190 70.6 100% consolidated for 10 months in FY11E
Domestic Business 1,080 1,663 2,322 2,711 27.7
% of Total 77.5 81.5 66.2 63.6
G) Keyline Brands 201 219 236 253 7.5
H) Rapidol + Kinky 100 142 172 197 17.9
I) GGME 12 18 21 26 20.0
J) Megasari - - 527 727 - Consolidated for only 10 months in FY11E
K) Tura - - 55 84 - Consolidated for 9 months in FY11E
L) Issue + Argencos - - 173 265 - Consolidated for 9 months in FY11E
International Business 313 378 1,184 1,552 102.6
% of Total 22.5 18.5 33.8 36.4
GCPL Cons Revenue 1,393 2,041 3,506 4,263 44.5
#
Source: Company, Angel Research; Note: for FY2010-12E period

Exhibit 15: Key Assumptions – Category-wise revenue breakup
Core Categories FY2009 FY2010 FY2011E FY2012E CAGR#
Personal Care 1,011 1,151 1,311 1,459 12.6
Personal Wash (A, E, K) 748 849 970 1,081 12.9
Toiletries (C, G) 263 302 340 378 11.8
Hair Care (B, H, L) 327 410 649 797 39.4
Home Care (D, F, I, J) 55 480 1,546 2,007 104.5

% of Total FY2009 FY2010 FY2011E FY2012E
Personal Care 72.5 56.4 37.4 34.2
Personal Wash 53.7 41.6 27.7 25.4
Toiletries 18.9 14.8 9.7 8.9
Hair Care 23.5 20.1 18.5 18.7
Home Care 4.0 23.5 44.1 47.1
Source: Company, Angel Research, Note:# for FY2010-12E period

Exhibit 16: Key Assumptions – Geography-wise revenue breakup
Geographies FY2009 FY2010 FY2011E FY2012E CAGR#
India (Domestic incl GHPL) 1,080 1,663 2,322 2,711 27.7
UK (Keyline Brands) 201 219 236 253 7.5
Asia (Megasari & GGME) 12 18 548 753 -
Africa (Rapidol, Kinky & Tura) 100 142 227 281 41.0
LatAm (Issue & Argencos) - - 173 265 -

% of Total FY2009 FY2010 FY2011E FY2012E
India (Domestic incl GHPL) 77.5 81.5 66.2 63.6
UK (Keyline Brands) 14.4 10.7 6.7 5.9
Asia (Megasari & GGME) 0.9 0.9 15.6 17.7
Africa (Rapidol, Kinky & Tura) 7.2 6.9 6.5 6.6
LatAm (Issue & Argencos) - - 4.9 6.2
Source: Company, Angel Research, Note:# for FY2010-12E period

July 26, 2010 8


Exhibit 17: Peer Valuation
Company Reco Mcap CMP TP* Upside P/E (x) EV/Sales (x) RoE (%) CAGR #
(Rs cr) (Rs) (Rs) (%) FY11E FY12E FY11E FY12E FY11E FY12E Sales PAT
Asian Paints Neutral 24,137 2,516 2,461 (2.2) 28.2 23.5 3.2 2.7 39.9 38.5 15.5 15.3
Colgate Reduce 11,549 849 798 (6.0) 26.9 23.5 4.9 4.3 117.3 108.8 14.3 7.8
Dabur Reduce 18,013 209 192 (7.9) 30.3 26.0 4.5 3.9 41.5 39.2 16.0 17.4
GSKCHL Reduce 7,538 1,792 1,622 (9.5) 27.5 23.2 3.0 2.5 27.7 27.8 17.8 18.8
HUL Reduce 56,941 262 237 (9.4) 25.9 23.0 2.8 2.4 73.5 72.1 10.8 8.6
GCPL Buy 11,035 341 397 16.3 23.8 18.9 3.5 2.9 34.2 30.1 44.5 31.1
ITC Neutral 112,114 298 310 4.1 23.7 21.1 5.0 4.4 31.4 30.1 14.4 15.2
Marico Reduce 7,579 124 115 (7.8) 26.9 22.8 2.5 2.2 36.6 32.3 14.4 17.4
Nestle Neutral 28,381 2,943 2,955 0.4 36.1 29.9 4.7 4.0 118.2 118.6 16.5 20.4
#
Source: Company, Angel Research, Note: denotes CAGR for FY2010-12E, * In case of Neutral recommendation, TP = Fair value

Exhibit 18: Angel v/s consensus estimates
Top-line (Rs cr) FY2011E FY2012E EPS (Rs) FY2011E FY2012E
Angel estimates 3,506 4,263 Angel estimates 14.3 18.0
Consensus 3,154 3,769 Consensus 13.9 16.7
Diff (%) 11.2 13.1 Diff (%) 3.2 7.8

Exhibit 19: Returns - GCPL v/s Sensex (Indexed to 100) Exhibit 20: One-yr forward P/E band

300% 400 15x 18x 21x 24x
Sensex GCPL
350
250%
300
Share Price (Rs)

200% 250
150% 200
150
100%
100
50% 50
-
0%
Jan-06

Jan-07

Jan-08

Jan-09

Jan-10
Jul-05
Oct-05

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Oct-09

Jan-10

Jul-10
Apr-07

Apr-08

Apr-09

Apr-10


Exhibit 21: One-yr forward P/E chart Exhibit 22: One-yr forward Premium v/s Sensex chart

35.0 120%
30.0 100%
80%
25.0
60%
20.0 40%
15.0 20%
10.0 0%
-20%
5.0
-40%
- -60%
Oct-02

Oct-03

Oct-04

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Mar-10
Apr-02

Aug-05

Nov-06
Apr-07
Sep-02

Jul-03
Dec-03

Jun-06

Sep-07

Jul-08
Dec-08

Source: Company, Angel Research; Note: Red line indicates 5-year average Source: Company, Angel Research; Note: Red line indicates 5-year average

July 26, 2010 9


Profit & Loss Statement Rs crore
Y/E March FY2007 FY2008 FY2009 FY2010 FY2011E FY2012E
Gross sales 990 1,133 1,435 2,082 3,580 4,357
Less: Excise duty 38 30 42 41 74 94
Net Sales 952 1,103 1,393 2,041 3,506 4,263
Other Operating Income - 1 4 2 7 9
Total operating income 952 1,104 1,397 2,044 3,513 4,272
% chg 36.0 16.0 26.5 46.3 71.9 21.6
Total Expenditure 772 888 1,186 1,634 2,848 3,449
Cost of Materials 462 518 770 946 1,658 2,029
Advertising Exp 77 92 97 133 287 341
Personnel 54 73 87 152 245 290
Others 178 206 233 403 657 789
EBITDA 180 214 207 407 658 814
% chg 27.2 19.4 (3.4) 96.6 61.6 23.7
(% of Net Sales) 18.9 19.5 14.9 20.0 18.8 19.1
Depreciation& Amortisation 14 18 19 24 41 53
EBIT 165 196 188 384 617 761
% chg 27.5 18.6 (4.3) 104.2 60.7 23.4
(% of Net Sales) 17.4 17.8 13.5 18.8 17.6 17.9
Interest & other Charges 10 15 19 11 73 68
Other Income 3 5 37 45 56 66
(% of PBT) 1.7 2.4 17.4 10.7 9.2 8.6
Share in profit of Associates - - - - - -
Recurring PBT 159 187 209 420 606 768
% chg 20.0 18.3 11.6 100.7 44.4 26.6
Extraordinary Expense/(Inc.) (10) - (1) - - -
PBT (reported) 168 187 210 420 606 768
Tax 24 28 37 80 142 184
(% of PBT) 15.4 15.1 17.5 19.1 23.5 24.0
PAT (reported) 144 159 173 340 464 583
Add: Share of associates - - - - - -
Less: Minority interest (MI) - - - - - -
PAT after MI (reported) 144 159 173 340 464 583
ADJ. PAT 134 159 173 340 464 583
% chg 11.1 18.7 8.4 96.7 36.6 25.8
(% of Net Sales) 14.1 14.4 12.4 16.6 13.2 13.7
Basic EPS (Rs) 5.9 7.1 6.7 11.0 14.3 18.0
Fully Diluted EPS (Rs) 4.1 4.9 5.3 10.5 14.3 18.0
% chg 11.1 18.7 8.4 96.7 36.6 25.8

July 26, 2010 10


Balance Sheet Rs crore
SOURCES OF FUNDS
Equity Share Capital 23 23 26 31 32 32
Preference Capital - - - - - -
Reserves& Surplus 99 149 546 924 1,728 2,084
Shareholders Funds 122 172 572 955 1,760 2,117
Minority Interest - - - - - -
Total Loans 174 187 278 37 1,469 1,369
Deferred Tax Liability 8 9 4 7 7 7
Total Liabilities 304 368 853 998 3,236 3,492
APPLICATION OF FUNDS
Gross Block 189 207 285 359 637 812
Less: Acc. Depreciation 111 125 110 153 195 247
Net Block 79 81 175 206 443 565
Capital Work-in-Progress 40 72 3 1 127 146
Goodwill 169 183 265 368 1,618 1,768
Investments 0 0 8 67 317 317
Current Assets 278 352 733 910 1,513 1,631
Cash 47 43 378 305 287 233
Loans & Advances 46 67 127 225 491 554
Other 184 243 228 380 735 843
Current liabilities 262 323 330 553 782 934
Net Current Assets 16 29 403 357 731 697
Misc Exp - 3 - - - -
Total Assets 304 368 853 998 3,236 3,492

Cash Flow Statement Rs crore
Profit before tax 159 187 209 420 606 768
Depreciation 14 18 19 24 41 53
Change in Working Capital (41) (22) (45) (13) (412) (37)
Interest / Dividend (Net) 10 13 (17) (16) 43 35
Direct taxes paid 24 28 37 80 142 184
Others 14 (2) (0) (24) 19 17
Cash Flow from Operations 131 165 130 310 156 652
(Inc.)/ Dec. in Fixed Assets (111) (63) (161) 34 (1,655) (343)
(Inc.)/ Dec. in Investments 1 - (8) (67) (250) -
Cash Flow from Investing (110) (63) (169) (33) (1,905) (343)
Issue of Equity - - 396 5 531 -
Inc./(Dec.) in loans 105 13 90 (241) 1,432 (100)
Dividend Paid (Incl. Tax) 97 109 120 104 189 227
Interest / Dividend (Net) 7 13 (8) (16) 43 35
Cash Flow from Financing 1 (108) 375 (324) 1,731 (363)
Inc./(Dec.) in Cash 21 (5) 336 (47) (18) (54)
Opening Cash balances 26 47 43 352 305 287
Closing Cash balances 47 43 378 305 287 233

July 26, 2010 11


Key Ratios
Valuation Ratio (x)
P/E (on FDEPS) 82.3 69.3 63.9 32.5 23.8 18.9
P/CEPS 51.9 43.4 45.7 28.9 21.8 17.3
P/BV 63.1 44.9 15.3 11.0 6.3 5.2
Dividend yield (%) 1.1 1.2 1.2 1.2 1.5 1.8
EV/Sales 11.7 10.1 7.8 5.3 3.5 2.9
EV/EBITDA 62.1 52.1 52.8 26.4 18.6 15.0
EV / Total Assets 36.8 30.4 12.8 10.8 3.8 3.5
Per Share Data (Rs)
EPS (Basic) 5.9 7.1 6.7 11.0 14.3 18.0
EPS (fully diluted) 4.1 4.9 5.3 10.5 14.3 18.0
Cash EPS 6.6 7.9 7.5 11.8 15.6 19.7
DPS 3.8 4.1 4.0 4.1 5.0 6.0
Book Value 5.4 7.6 22.2 31.0 54.4 65.4
Returns (%)
RoCE 72.3 58.5 30.8 41.5 29.1 22.6
Angel RoIC (Pre-tax) 411.5 171.4 109.0 166.7 96.9 69.5
RoE 143.6 108.5 46.6 44.5 34.2 30.1
Turnover ratios (x)
Asset Turnover 5.0 5.3 4.9 5.7 5.5 5.3
Inventory / Sales (days) 51.9 63.4 43.9 47.3 52.1 48.7
Receivables (days) 18.5 16.9 15.8 20.6 24.3 23.5
Payables (days) 96.7 96.2 76.5 95.2 77.5 75.9
Net Working capital (days) (12.2) (4.4) 6.4 9.2 46.2 39.7

July 26, 2010 12


Research Team Tel: 022 - 4040 3800 E-mail: research@angeltrade.com Website: www.angeltrade.com

Disclaimer
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should make
such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies
referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and
risks of such an investment.
Angel Broking Limited, its affiliates, directors, its proprietary trading and investment businesses may, from time to time, make
investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this
document are those of the analyst, and the company may or may not subscribe to all the views expressed within.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Limited has not independently verified all the information contained within this document. Accordingly, we cannot testify,
nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document. While
Angel Broking Limited endeavours to update on a reasonable basis the information discussed in this material, there may be regulatory,
compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Angel Broking Limited and its affiliates may seek to provide or have engaged in providing corporate finance, investment banking or
other advisory services in a merger or specific transaction to the companies referred to in this report, as on the date of this report or in
the past.
Neither Angel Broking Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from or in
connection with the use of this information.
Note: Please refer to the important `Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Limited and its affiliates may have
investment positions in the stocks recommended in this report.

Disclosure of Interest Statement GCPL
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No

Note: We have not considered any Exposure below Rs 1 lakh for Angel, its Group companies and Directors.

Ratings (Returns) : Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
Reduce (-5% to 15%) Sell (< -15%)

July 26, 2010 13

GCPL

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