The stock is still 5.4% lower since media reports on Thursday said the company was in advanced discussions to buy Raymond’s fast-moving consumer goods (FMCG) business.
After market hours on Thursday, GCPL said it would acquire the FMCG business of Raymond Consumer Care Ltd (RCCL). The deal announcement was surprising even as it’s expected to improve GCPL’s total addressable market. RCCL’s FMCG business derived as much as 60% of its sales from deodorants, followed by 20% from sexual wellness. The two key brands here are Park Avenue and KamaSutra.
There are concerns, however. Analysts at Nomura Financial Advisory and Securities (India) are sceptical on GCPL’s capital allocation and the rationale for ‘buy’ versus ‘make’. “Both deodorants and condoms are fragmented and highly competitive; we believe these brands will remain in investment phase in the medium term," they said in a report.
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