**Colgate Palmolive - Q4 FY20 (Audited –Cons)**
CMP: 1,304
Total revenue from operations 1,062 Cr
1,146 Cr (-7.31%) YoY | 1,136 Cr (-6.59%) QoQ
Year ending revenue: 4,488 Cr Vs. 4,432 Cr (1.21%)
Net Profit of 204.1 Cr
197.5 Cr (3.51%) YoY 199.1 Cr (2.54%) QoQ
Year ending Net profit: 816.4 Cr Vs. 775.5 Cr (5.23%)
EPS (in Rs.) 7.51
7.26 YoY | 7.32 QoQ
Year ending EPS: 30.02 Vs. 28.51
View: Result is below expectation. YoY revenue declined and profit slightly up due to lower amount of Taxation and its impact around INR 50 Cr in Q4FY20 and 124 Cr in full year 2020.
**Business Updates & Highlights**:
Colgate-Palmolive (India) Limited today reported Net Sales of Rs. 1,062.4 crore for the quarter ended March 31, 2020, a decrease of 7.4% over the same quarter of the previous year with volume decline at 8%.
Q4FY20 EBITDA is around INR 281.9 Cr Vs. 322.3 Cr in Q4FY19 Vs. 321.7 Cr in Q3FY20 therefore declined by 12.7% in YoY and 12.4% in QoQ. FY20 EBITDA is around INR 1,250 Cr Vs. 1,273 Cr in FY19 therefore declined by 1.8%. Operating profit margin in Q4FY20 is around 26.5% Vs. 28.09% in Q4FY19.
**The Company has declared a Second Interim Dividend of Rs. 16/- per share aggregating to Rs. 43,518 Lakhs on May 21, 2020 which will be paid on and from June 16, 2020** Total dividend is around INR 28 per share.
**Financial**
ROE and ROCE is around INR 51% and 73% respectively and book value per share is around INR 55 and share is currently trading at 23x of its book value. Company is currently trading at annualized PE of around 44 which is good as per industry benchmark. Promoter holding is around 51% in the company which is fair and stable. FIIs, mutual fund and insurance cos hold around 16%, 3.7% and 5.8% in the company. Cash and cash equivalent from operating activities as of March 2020 is around INR 890 Cr Vs. 983 Cr as of March 2019. The company is virtually debt free and liquidity position and debtor realization is also good.
**Share View**: Share price high 1,641 (52 week) and now 1,341. Colgate-Palmolive (India) Limited is India’s leading provider of scientifically proven oral care products with multiple benefits at various price points. The range includes toothpastes, toothpowder, mouthwash, toothbrushes and dental gel under the ‘Colgate’ brand. The Company also provides personal care products with its range of shower gels and liquid hand washes under the “Palmolive” brand name.
Position: Share strong support price is INR 1,260/1180. Long term Investor can continue with the company with target price of INR 1,480/1,540.
Opportunities: Colgate has been ranked as India’s #1 Most Trusted Oral Care Brand for nine consecutive years from 2011-2019 by Brand Equity’s Most Trusted Brands Survey. The brand Colgate in toothpaste in highly popular among the household Tier II, Tier III and villages also. India's #1 selling Toothbrush brand Superflexi has re-launched its Black variant with an all new offering. Company is regularly paying dividend on YoY.
Risk: The company is already facing growth concern in YoY and delivered poor growth less than 5% in last 4-5 years and this year due to lockdown also operation got impacted and Q1FY21 will be more challenging since due to long lockdown in April and May and supply chain also got impacted. Also further ColPal is Highly competitive business and with direct competition from Patanjali (Dant Kranti), HUL (Ayush, Pepsodent, close up etc.), babool toothpaste. Market share continuously declined despite launching various Ayurvedic toothpaste and other brand also.
Disclaimer: Views are shared based on market research and study and personal in nature. Others can take the different view and opinions. Please do the thoroughly study before enter or exit the shares.
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