Godrej Cons tanks 10% as MD makes sudden move

Shares of FMCG giant Godrej Consumer Products Ltd. plummeted nearly 10% to Rs 916 on the Bombay Stock Exchange on Wednesday, after the company revealed that its Managing Director and Chief Executive Officer, Sudhir Sitapati, had abruptly resigned with immediate effect. In his resignation letter, Sitapati pointed out that the company's total shareholder return averaged around 10% from May 7, 2021, when he was appointed, compared to around 8% for the Nifty FMCG index.

He also noted that 97% of analysts currently rate the stock as either Buy or Hold, which is among the highest levels in the sector. Sitapati further highlighted that the Indian FMCG sector is emerging from a challenging period, with GCPL's growth accelerating, as evidenced by a 19% revenue growth and 9% underlying volume growth in Q1 FY27, both of which were multi-quarter highs.

He concluded that the task he had set for himself at GCPL was complete and it was the right time for him to move on. Following the announcement, HSBC downgraded GCPL to Hold and cut its target price to Rs 1,120, citing uncertainty around execution. CLSA rated GCPL as Underperform and slashed its target price to Rs 772, while Citi retained its Buy rating with a target price of Rs 1,350, expecting the stock to see a near-term negative reaction due to Sitapati's unexpected exit.