In a latest note, Nomura says that the exit of Sudhir Sitapati as the end of Godrej Consumer Products' "GCPL 3.0" and the start of a new phase under Aasif Malbari, who has taken over as managing director and CEO.
While the brokerage expects business continuity and no immediate change to FY27 guidance, it has flagged uncertainty around the leadership transition and cut its target price to Rs 1,110 from Rs 1,300, while retaining its 'Buy' rating.
Nomura said Sitapati's stepping down as MD & CEO "came as a shock", particularly as the board had approved his reappointment for another five years on May 7, 2026, and shareholders approved it at the AGM on August 7.
Sitapati, who was appointed on October 18, 2021, stepped down effective August 11. Nomura said that under him, GCPL "underwent a material transformation in its strategy, operations and team".
The brokerage highlighted a "material step-up in innovation", withGCPLforaying into "categories of the future" such as deodorants and perfumes, liquid detergents, body wash, pet care, men's face wash, toilet cleaner and dishwash.
It also pointed to dealer and retailer SKU rationalisation, which improved ROI, and new mega-factories that helped consolidate manufacturing, create efficiencies and bring a "material improvement in cash flow from operations".
Nomura said Sitapati "not only attracted new strong talent / leadership across geographies and functions", but also attracted investor interest in the stock by sharing his roadmap and focus areas for GCPL.
In his resignation letter, Sitapati highlighted four points: GCPL's share price return under his tenure was 10% versus 8% for the Nifty FMCG Index; 97% of analysts had Buy or Hold ratings on GCPL; "as India emerges from a difficult period for FMCG, GCPL's growth has begun accelerating"; and therefore "the task he had set for himself was done".
Sitapati requested an immediate release. Nomura said that since his successor was already in place and the company preferred an internal candidate with "no transition period needed", the board agreed to the change.
Nomura expects "business continuity to be maintained" under Malbari, with FY27 guidance unchanged and "no sudden changes likely". The brokerage said it will look for an India CEO under Malbari, who will serve as global CEO.
Malbari has three decades of experience in the FMCG and auto industries, including at GCPL, Tata Motors and Hindustan Unilever. He joined GCPL on August 10, 2023, as global CFO and president of Africa.
As global CFO, Malbari "directly oversaw business strategy and played a critical role in partnering leadership teams across geographies to advance growth and strengthen performance".
Nomura highlighted his transformation of GCPL's Africa business, where EBITDA margins improved from 9% in FY24 to 15% in FY26.
Malbari's focus areas are to "drive volume growth globally, outperform the market and grow profitably".
The brokerage highlighted several priorities under the new CEO: "getting soaps and liquid vaporizers (LV) back to profitable growth"; "harvesting GCPL's strong R&D capabilities better"; "tapping into Q-comm more and moving faster with Muuchstac"; "increasing the pace of overall execution"; and "growing perfumes organically".
Nomura retains 'Buy', cuts target price to Rs 1,110
Nomura has retained its 'Buy' rating on GCPL but lowered its target price to Rs 1,110 from Rs 1,300, citing uncertainty around the transition.
The brokerage has reduced its EV/EBITDA multiple to 28.5 times from 33 times, a 15% discount to its 10-year average given the uncertainty.
Nomura values GCPL on a sum-of-the-parts basis using June 2028 estimates and forecasts an EPS compound annual growth rate of 12%.
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