Godrej Consumer Products share zooms 4% on rating upgrade

On the BSE, Godrej Consumer Products Limited (GSPL) surged 4% to an intraday high of Rs 907.95 after rating agency ICRA raised the company’s long-term rating to AAA (Stable) from AA+ (Stable) while retaining the company’s short-term rating of A1+. Corporate with a AAA credit rating are thought to be the safest in terms of prompt payment of financial commitments, and hence have the lowest credit risk. On the BSE, the stock began 1.26 percent higher at Rs 879.90, up from its previous finish of Rs 869.45. The company’s market capitalization increased to Rs 90,571.83 crore. In the last year, the FMCG behemoth has climbed by 29 percent. ICRA expects GCPL to continue to benefit from its established position in the domestic and worldwide FMCG markets, resulting in good cash accruals and the preservation of strong debt protection metrics and capital structure. Over the longer term, GCPL’s leverage will likely remain low, and its liquidity will likely remain good, thanks to on-balance sheet financing.

“The long-term rating upgrade reflects ICRA’s expectation that Godrej Consumer Products Limited (GCPLfinancial )’s and operational risk profile will remain strong in the future, driven by its established market position in the fast-moving consumer goods (FMCG) industry in the categories in which it is present, as well as its well-diversified product segments and geographical presence,” the rating agency said. ICRA pointed out that GCPL has a history of launching new products to meet changing customer tastes, and that it anticipates revenue growth to be driven by stable demand growth and the introduction of new products across geographies in the future.

Because of this, the rating agency anticipates the operating margin for GCPL’s overseas businesses to increase and stabilize over time.

“GCPL’s continued strong performance, robust capital structure, well-diversified portfolio of products and geographies with strong brands in market leadership positions, and other factors reflect the resiliency of our business model, the high relevance we have to our customers’ most important objectives, and our team’s ability to execute in a challenging environment,” said V Srinivasan, Company Secretary and Chief Financial Officer.

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