Colgate-Palmolive (India) Ltd. share price target

However, we remain optimistic on the medium-term earnings prospects, given (i) new-found aggression after the recent CEO change (ad spend has grown sharply for two quarters), (ii) direct reach expansion and (iii) past track record of regaining share due to its strong moats (brand, global expertise, category focus and distribution). While reported numbers on sales/EBITDA/PAT were either in line or ahead of estimates, (i) lower-than-expected volume growth, (ii) category weakness in the near term and (iii) the likelihood of category recovering with a lag drive 8-10% cut in our forecasts for FY21. While reported numbers on sales/EBITDA/PAT were either in line or ahead of estimates, (i) lower-than-expected volume growth, (ii) category weakness in the near term and (iii) the likelihood of category recovering with a lag drive 8-10% cut in our forecasts for FY21.

26 November 2019 It was important for CLGT to arrest the hemorrhage in the toothpaste market share before resuming the growth path. In that regard, the company has done well over the past few quarters to maintain a stable market share of 51%-52% like Cibaca Ved Shakti and Swarna Ved Shakti, as well as the recently launched Charcoal toothpaste. CLGTs market share in herbal is around one third and therefore sharp growth in the salience of the category (now 25-30% of toothpaste market sales) impacted its overall market share. At a time when wholesale trade (both rural and urban) is facing pressure, this move would have helped arrest the hemorrhage and is likely to aid growth in market share. The premium segment of the market was hurt amidst sharp growth in the salience of the natural segment, but this has changed over the past few months.

Q2FY20 sales were up 4.5% YoY to Rs. 1,213cr. driven by a 5.0% increase in domestic sales that was in line with market expectations. Prevailing liquidity crunch in the economy and rural slowdown along with slow volume growth, negatively impacted the overall topline growth. Colgate Palmolive posted Q2FY20 EBITDA of Rs. 323cr (-2.0% YoY) while the EBITDA margin declined 180bps YoY to 26.6% on account of strong investment in advertising and promotion expenditure on the back of a difficult demand environment. PAT beat consensus estimates by 4.4% and was up 24.3% driven by the...

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. New management (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. Thereby, we model revenue/EBITDA CAGR of ~9/13% over FY20-22E. We don't expect a re-rating in the stock owing to modest earnings expectation. We maintain NEUTRAL. Colgates 2Q performance was weaker than anticipated. Company has arrested market share decline but that is only half the job. Oral care category growth lags sector growth and hence Colgate needs to gain share to justify re-rating in the stock. We cut EPS by 1-3% and value the co. at 35x on Sep-21 EPS, arriving at a TP of Rs 1,400. Maintain NEUTRAL.

flavors and Palmolive Luminous Oil shower gel Colgate reported disappointing numbers with just 4% equated volume growth (percentage increase in dozen packs) despite 250bps increase in ad-spends (est tonnage volume growth at 1.5-2%). Although CLGT has stopped sharing...

of FY20-21 by 0.9-1.3% given 1) 10- year low 1Q20 exit market share 2) 1Q tonnage volume growth of just 1.3% and 3) slowdown in toothpaste segment except naturals. However, Colgate is making a push for volumes led by 1) 30% increase in direct distribution 2) bringing family pack prices of Total closer to CDC and 3) more offers in bundled packs. Instead of being more...

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....

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...

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...

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