Motilal Oswal's research report on Colgate-Palmolive
CLGT’s new CEO Prabha Narasimhan unveiled her plans to drive growth in oral care, increase premiumization in the category, and focus on the non-oral care business as part of its annual investor day. Key takeaways from the day include the following: India is one of the three key countries for Colgate globally, and thus, highly important from a global perspective. From a growth perspective, the company plans to focus on rural areas where 55% of the population do not brush daily and in urban areas where only about 20% of the households brush twice a day. Slower growth in the naturals category in the last couple of years where CLGT is relatively under-indexed also enables some stability to its plans. From a toothbrush perspective, the company’s focus will be on (a) hastening replacement of toothbrushes (from once in every six months in urban areas and from once every 15 months in rural areas); (b) gentle toothbrushes, and (c) powered toothbrushes, which is a nascent category. From a premiumization perspective, the focus will be on teeth whitening products with an emphasis on oral beauty. Dentist-specific products from the parent portfolio, Colgate Total (the largest global brand) and kids toothpastes are other avenues for premiumization. Palmolive’s focus on body wash and more recently face wash will be its sole foray into personal care products for now There were no financial targets stated as part of the investor day, and thus, there are no changes to estimates.
Outlook
We retain our target multiple of 35x Sep'24 EPS to arrive at our TP of INR1,620. We reiterate our Neutral rating on the stock.
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