Summary of Contents
STOCK UPDATE
Godrej Consumer
Products Cluster: Apple Green Recommendation: Buy Price
target: Rs912 Current market price: Rs547
The makings of an FMCG
MNC
The business outlook and strategies shared by the
GCPL management in the analyst meet are in keeping with the reasons
why we put a Buy on the GCPL stock (refer our Investment arguments
as mentioned in our Stock Idea report "Rich lather and colour",
dated December 5, 2005). There has been no deviation from our
assumptions and hence we remain bullish on the stock. We continue to
like GCPL considering (1) the upside in the core product categories
(due to a combination of a lower market share and under-penetration
of products); (2) the growth along with the widening of the product
basket, which now includes shaving cream, diaper, talc powder etc;
(3) the opportunity to grow across geographies with the acquisition
of Keyline Brand; and (4) the healthy cash generation and profitable
deployment of the cash, eg it is setting up of new capacities in
Baddi (Himachal Pradesh) and Sikkim.
The stock trades
at a price/earnings ratio of 17.4x FY2008E earnings and enterprise
value/earnings before interest, depreciation, tax and amortisation
of 14.8x FY2008E. The valuations are in line with that of its peers,
which are trading in the range of 15-20x FY2008E earnings.
SECTOR
UPDATE
Telecom
India's cellular subscriber
base crosses 100 million With an addition of 4.2 million new
users in May, the country's cellular subscriber base has crossed the
100-milllion mark. The total subscriber base has grown by 4.4% and
stands at 100.6 million as of May 2006. The addition of 3.18 million
users in the month has taken the GSM subscriber base to 75.32
million. On the CDMA front, 1.1 million new users were added in May,
that is a growth of 4.55% over April 2006.
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