New CEO at Godrej Consumer Products drives a sharp rerating for the stock

The stock gains 21 per cent; improvement in financial metrics key to sustain show

In a weak market, the Godrej Consumer Products stock shot up 21 per cent, its single largest daily gain thus far after brokerages upgraded the stock. The rally is on the hope that Sudhir Sitapati, the new managing director and chief executive officer will be able to reverse the sluggish growth trajectory of its key segments over the past few years and bridge the gap in capital efficiency with peers in the consumer space. Given the wide gap in growth metrics and return ratios, the stock has been trading at a sharp discount to peers.

The hope rally rests on