top of page

Godrej Consumer Products: A “Knight” in Shining Armour 🦟

Updated: Mar 13


mosquito tornado Pune

Most of us must’ve seen the viral video of the “tornado” of mosquitoes over a river in Pune, frightening people across the country as they realised that they aren’t alone in the fight against, what is considered, the most deadly species on the planet (kills over 7,00,000 people a year, of which India makes up 75-80%)!



Yet, while the urban affluent can use expensive repellents and electric bats, the rural population must choose between coils or agarbattis. Lighting just one of these is equivalent to the smoke from 50 cigarettes!


Furthermore, while agarbattis are used for poojas and as insect repellents, no agarbatti in the country has passed the regulations that make it safe for the purpose - so what does the section of the population that makes up for more than 80% of mosquito-related deaths in India do?


Here is where the “Knight” in shining armour comes in - Godrej Consumer Products! A company with a 126-year legacy and market leadership in the mosquito-repellent category with Good Knight (60% market share) and HIT (80% market share), Godrej Consumer Products has recently launched a new product that might change the game!


How has it achieved this dominance and what is Godrej Consumer Products intending to ensure that “Ek Bhi Machhar Nahi Bachega"?


1. The Big Adi Godrej Bet

While Good Knight and HIT are prized possessions of the Godrej Consumer Products empire (almost 30% of FY23 revenues), these brands weren’t created by the company, but rather a split-second acquisition made in 1994! The chronology is quite interesting:


godrej consumer goodknight

Cut to 2023, the company believes that this household insecticide mammoth, if sold, would be worth about Rs. 30,000 crore - a 13x growth based on what it was worth in 2010. It is almost poetic that the company’s stock has also grown by 13x in the same period!


After 2010, the company constantly attempted to target every strata of society with a cohesive blend of innovation and pricing - thereby democratising this space - but how?


2. Democratising Mosquito Repellents

Around the 2010 era of Godrej Consumer Products, it had recognised a gap in the market - penetration of mosquito repellent products was around 20% in urban India and around 10% in rural India. While the former needed innovative products that lasted long, the latter was plagued by the lack of pocket-friendly and safe options.


Hence, over the next 13 years, it decided to work on innovation and pricing, in an attempt to make Goodknight and Hit an all-India product:


godrej consumer innovation

The result? Mosquito repellent penetration went up to 44% for urban India and 30% for rural India, and Godrej Consumer Products’ market share in this space went from the 15-20% range to 60-80% now!


Yet, the problem remains that the rural Indian population still has a long way to go towards fixing this life-threatening mosquito problem - and that is where the latest addition to the Goodknight product range comes in!


3. The Latest Addition - Good Knight Agarbatti

We already established in the beginning that not a single agarbatti brand in the country has passed the necessary regulations that allow it to be sold legally as an insect repellent. Yet, the rural population of the country continues to use it for this purpose as well.


This Rs. 1,200 crore unorganised market clearly causes more harm than good due to the harmful toxins released when they burn but has been irreplaceable to its price point and place in the Indian culture - until now.


At the beginning of Feb’24, Godrej Consumer Products launched the first-ever legal, anti-mosquito agarbatti in the country called the Goodknight Agarbatti:


  • Priced at Rs. 10 a pack to compete with regular agarbattis

  • Has a unique molecule called Renofluthrin that is said to be 2x more effective than regular agarbattis, without the harmful side effects

The company aims to get a 50% market share over the next few years from these unorganised players, claiming the spot of the “knight” in shining armour once more, and adding a little more to its mosquito-repellent empire.


What Else?

While we have heavily focussed on its household insecticide products, the company has a couple of other achievements under its belt:


  1. Gets 75% of its revenue from a mere 11 brands, including Goodknight, Hit, Cinthol, Aer, Expert Hair Care and Ezee, all 11 of which are either #1 or #2 in their respective industries

  2. Acquired a 30% stake in BBlunt hair salons in 2013 for an assumed amount of around Rs. 20-25 crore, launched a line of products under it, and sold off its stake and those products to MamaEarth for about Rs. 85 crore in 2022 (more than 3x return)

  3. Acquired Raymond Group’s Park Avenue and Kamasutra in an all-cash deal worth Rs. 2,825 crore last year. Both brands are #2 in their respective industries, contributing to about 5% of revenues as of now and will eventually become a part of their top 10 brands owing to the high-growth space that these brands hail from

From a financial standpoint, while it has performed at par with its direct competitor Dabur in terms of revenue and profitability over the last 3 years, its valuations are a little steeper at a 2-year forward PE of 45x based on FY26E, as opposed to Dabur trading at 36x, owing to a better product portfolio, new launches and the Raymond business being integrated within this year.


With these valuations possibly sustaining, considering the prospects lined up for the household insecticide space and its personal care segment, buying into this company at the dips might just prove to be that long-term “hit” we need in our watchlists!


From making locks to making satellites, the Godrej Group’s combined legacy is certainly an infectious spirit - and Godrej Consumer Products has caught that “bug”!





 

Alphaware Advisory Services Private Limited (Brand Name - Rupeeting) makes no warranties or representations, expressed or implied, on products and services offered through the platform. It accepts no liability for any damages or losses, however, caused in connection with the use of, or on the reliance of its advisory or related services.

Past performance is not indicative of future returns. Please consider your investment requirements, risk tolerance, goals, time horizon, risk and reward appetite, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. Performance and returns of any investment portfolio can neither be predicted nor guaranteed.

Investments in mutual funds, stocks, ETFs and any other investment products that you see Rupeeting's views being expressed on are subject to market risks. Please read all scheme related documents carefully.

The content and data available in the material prepared by the company and on the website of the company, including but not limited to index value, return numbers and rationale are for information and illustration purposes only. Charts and performance numbers do not include the impact of transaction fee and other related costs. Past performance does not guarantee future returns and performances of the portfolios are subject to market risk.

The information is only for consumption by the client and such material should not be redistributed.

Data used for calculation of historical returns and other information is provided by exchange approved third party vendors and has neither been audited nor validated by the Company. Detailed return calculation methodology is available here. Detailed volatility calculation methodology is available here.

Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Alphaware Advisory Services Private Limited [SEBI RIA Registration No: INA000015747] [Validity of registration: February 08, 2021-Perpetual] [BASL ID: 1610] [Address: 1 Janki Centre, Off Veera Desai Road, Andheri West, Mumbai 400053] [Principal Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Compliance Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Grievance Officer details: Mr. Sagar Lele, Email id: sagar.lele@rupeeting.com, Contact No. +91-9769770046] [Platform Partner: smallcase] [CIN – U74999MH2019PTC320573] [GST No: 27AARCA8847R1ZF]

[SEBI regional address: SEBI Bhavan BKC, Plot No. C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai, Maharashtra, India, Pin Code – 400051.]

24 views0 comments

Comments


bottom of page