Colgate-Palmolive (India) Ltd. share price target

ICICI Securities Ltd | Retail Equity Research The company reported 6.9% YoY decline in revenue (6.5% growth on a comparable base) to | 1,041.3 crore (I-direct estimate: | 1,114.7 crore) with mere 4% volume growth despite a low base quarter CPIL maintained its leadership position with 52.4%, 44.6% market share in toothpaste, toothbrush categories, respectively. However, it is losing market share in toothpaste segment due to aggressive competition, especially in ayurvedic and naturals' toothpaste...

The Q1FY19 revenues came below our expectation. Albeit, on the favorable base of 5% dip in volume, the company posted mere 4% volume growth. This was not encouraging considering the other company like HUL is growing faster compared to Colgate in the oral care category. We attribute this lower growth to the high competitive intensity and delayed corrective action to enter in natural category. Yet, improvement in margin during the quarter was a savior. We believe that the company would report gradual recovery in volume growth on favorable base (-1% in Q2FY18) as better monsoon during the year would...

The company, yet again, reported drop in market share in toothpaste category in FY18 as volume share declined to 53.4% in FY18 from 55.1% in FY17 mainly due to intense competition, high dependence on wholesale channel and lower growth rate in Naturals segment. To counter competition in the Naturals space, the company launched Colgate Swarna Vedshakti (CSV) in the south (in October 2017) and after its success, the company now plans to roll it out nationally. It has also relaunched MaxFresh toothpaste to support volume growth. Further, the company is strenthening its direct reach given its high dependence on the wholesale channel. Although management guided volume growth of 45% which we believe is slightly on a lower side, we factor revenue CAGR of 11.8% over...

COLPAL revenues increased by 5.2% to Rs. 41,879.70 mn in FY18 backed by coagulated volume growth in toothpaste & toothbrush segment. EBIDTA increased by 26.6% to Rs. 11,123 mn in FY18 majorly due to decrease in expenses. Among operating expenses, inventory expenses & other expenses increased proportionately lower as compared to the growth in the top line. Thereby, EBIDTA margins expanded by 470bps to 28.2% in FY18. Depreciation for the year was up by 14.9% to Rs. 1565.1 mn in FY18. PAT increased by 16.6% to Rs. 6733.7 mn in FY18 due to increase in top line,...

Revenue increased by 5.66% to Rs. 1085.06 Cr in Q4FY18 when compared to the previous quarter. Colgate Palmolive (I) Ltd Q4FY18 results Comment

ICICI Securities Ltd | Retail Equity Research The company reported 7.2% YoY decline in revenue (5.2% growth on a comparable base) to | 1,091.7 crore (I-direct estimate: | 1,123.4 crore) with healthy volume growth of 4% aided by low base quarter CPIL maintained its leadership position with 53.4%, 44.8% market share in toothpaste, toothbrush categories, respectively. However, it is losing market share in toothpaste segment due to aggressive competition especially in ayurvedic and naturals toothpaste...

We downgrade to neutral (stock is up ~16% since our upgrade in Mar-18), as we believe near term recovery is priced-in. We value Colgate based on P/E of 35x on Mar-20 EPS to arrive at a TP of 1,203. Colgate registered 5/4% revenue/volume growth vs. expectation of 11/6%. Soft commodity inflation, favorable base & cost control initiatives drove healthy EBITDA/PAT growth of 26/26% (expectation 16/20%).

Colgate's 4QFY18 volume growth was a tad below our forecast at 4% - on a soft comparator, though (volume had declined 3% in 4Q LY due to the continued impact of demonetisation). Overall revenue, though, was significantly lower (470bps) vs expectations due to a rather sharp deceleration in net realisation growth to merely 1% in 4Q vs 4-6% in past 6M - possibly a function of Colgate's pre-GST price-hike having now anniversarised. On the positive side, toothpaste market share appears to have now stabilised for past 9M at c.53% without any incremental loss therein. On the flip side, management is pointing to a volume growth trajectory of just 4-5% level for the company going forward, which is a tad...

Colgate's revenue growth at 5% was below our expectations by 4% due to lower volumes and pricing. Margin expansion was strong, resulting in EBITDA and APAT growth of 26% and 28%, respectively; which were marginally below our expectations. Lower-than-expected volume growth and market share loss continues to be a disappointment. Management expects mid single-digit volume growth and improvement in...

We value Colgate based on P/E of 35x (earlier 34x) on Mar-20 EPS to arrive at a TP of 1,204. We upgrade our rating to BUY from NEUTRAL. We met the management of Colgate-Palmolive India (Colgate) to discuss (1) Recovery in the oral care market (2) Analysing Colgates market share losses in toothpaste and toothbrush (3) Colgates counter strategy to stabilize and regain market share (4) Health of the trade channels (5) Scope of entering new categories (pollination of global products)