Colgate-Palmolive (India) Ltd. share price target

We reiterate our HOLD rating on the stock with a revised target price of Rs 1,272 based on 37x FY21E adj. EPS. Market share stabilizes, and margin beats estimates Despite moderate demand in the rural area, COLPAL revenue grew 4.1% YoY to Rs. 1,076cr in Q1FY20. The increase in revenue was driven by higher domestic sales (6%), led by 4% YoY toothpaste volume growth; however, the company missed consensus estimate by 1.5%. EBITDA grew 8.3% YoY to Rs. 315cr (beating consensus by 2.9%). EBITDA margin was up 120bps YoY to 29.3%, as a result of lower cost of purchases....

Managing to stay afloat amid intense competitive pressure The competitive intensity has inched up in the oral care category over the years and intensified further recently due to muted demand conditions. Promotional spends by the company's key competitors (especially in natural oral care space) has continued to be intense. Despite this, Colgate has managed to maintain its volume market share over the last three quarters. Going ahead, we believe Colgate would try to gain market share primarily driven by new product launches. We believe its aggressive stance on...

The Q1FY20 results were in line with our expectation. On a base of 4%, the company's volume rose 4%. We view this as a decent performance, considering the slowdown in most consumer categories and intense competition in the oral care category. The launch of Swarna Vedshakti and...

Colgate's market share has largely stabilized but we still don't see signs of gaining meaningful share anytime soon. As a category leader, Colgate needs to drive category growth at a time when natural's fad is moderating. Senior level management churn (Ram Raghavan - MD and Mukul Deoras India chairman) keeps us interested in the story. Ram began his career as a management trainee with Colgate India in 1997. His recent experience as the head of innovation center at Colgate-Palmolive LATAM is exactly what Colgate India needs i.e. product excitement and diversification. With limited upside, we remain NEUTRAL on the company. We will be tracking any revamp in strategy that may trigger our upgrade. Colgates 1Q performance was slightly below our estimates (revenue and APAT). The story remains sombre but senior level management churn instills new hope. We cut EPS by ~2% to factor slower than expected recovery in FY20. We roll forward to Jun-21 EPS and value the co. at 35x, arriving at a TP of Rs 1,281. Maintain NEUTRAL

Rural sales is growing slower than Urban sales, recovery hinges on monsoons. We cut our EPS estimates for FY20 and FY21 by 3.1% and 2.9% due to 1) 4% domestic volume growth on a low base (4% in 1QFY19) 2) Inability to arrest decline in toothpaste market share (down ~30bps YTD) 3) heightened competitive intensity and trade promotions. Colgate is pinning hopes on...

Although CLGT expects a demand recovery in the coming quarters, near-term volume growth is likely to be in mid-single-digits, despite stability attained in market share in the previous quarter. CLGTs high rural and wholesale exposure means that near-term volume growth is likely to be in mid-single-digits, despite stability attained in market share in the previous quarter. However, a few factors are in CLGTs favor from the medium-term perspective (a) the toothpaste market share hemorrhage appears to have abated after three years, (b) there is evident traction driven by herbal and other launches and (c) valuations are relatively less expensive at ~35x FY21E EPS, ~7% discount to our ex-cigarette and alcohol consumer peer valuations. However, a few factors are in CLGTs favor from the medium-term perspective (a) the toothpaste market share hemorrhage appears to have abated after three years, (b) there is evident traction driven by herbal and other launches and (c) valuations are relatively less expensive at ~35x FY21E EPS, ~7% discount to our ex-cigarette and alcohol consumer peer valuations.

Colgate has attained the first step towards recovery i.e. stabilizing market share. Hereon, the co. needs to consolidate its position and return to market share gains. As a category leader, Colgate needs to drive category growth at a time when natural's fad is moderating. We believe the co. is taking the right steps (although at a modest pace) i.e. (a) Improving brand visibility (new TVC campaigns, in-store activations etc), (b) Re-launches of flagship products, (c) Regional based strategies (tastes and incomes), (d) Focus on low unit packs (drive sampling) and (e) Higher promotions (via multi-unit packs). We model partial recovery in volume growth and market share in FY20-21E. With limited upside, we remain NEUTRAL on the company. Colgates 4Q performance was slightly below our estimates (volumes and margins). Key positive is that market share has now begun to stabilize over 2HFY19. However, oral care category growth continues to trail FMCG sector. As a result, we dont expect the co. to deliver high-single digit to low double digit volume growth unless it begins to gain significant market share (low probability). We maintain NEUTRAL and value the co. at 35x on Mar-21 EPS, arriving at a TP of Rs 1,227.

The Q4FY19 results were in line with our expectation. On a base of 4%, the company was able to post a 5% volume growth. We view this as a strong performance, considering the slowdown in most consumer categories and intense competition in the oral care category. We attribute the improvement in volume performance to the recent launch of Swarna...

Volume led growth quarter; Naturals' portfolio outperforms CPIL has been able to maintain its toothpaste volume market share at 52% and increase its toothbrush market share by 280 bps to 48% on a YoY basis. CPIL posted ~6% topline growth largely driven by volume growth of 5%. Colgate's volume growth has improved in past few quarters (7% each in Q2Q3FY19) primarily driven by new launches in the naturals' portfolio. CPIL has aggressively increased its promotional spend to drive growth in its 'Naturals' and overall toothpaste portfolios. In naturals, CPIL has increased its volume market share by 120 bps YoY to 8.1%. We expect naturals' portfolio...

ICICI Securities Ltd | Retail Equity Research On an unfavourable base of 12% volume growth, CPIL was able to post 7% volume growth in Q3FY19 EBITDA margins improved 123 bps to 28.6% on account of 79 bps decline in employee costs to sales, 22 bps decline in advertisement spend to sales & 30 bps fall in miscellaneous expenses to sales...