Dolat Capital's research report on Colgate-Palmolive
Colgate’s Q1FY21 results were ahead of our expectation on all parameters. The company posted 7% volume de-growth during Q1. While toothpaste reported mere 3% volume de-growth, a higher decline in toothbrush portfolio impacted overall volume performance. A&P spends reduced significantly, in line with lower spends of the peers. We believe that the A&P spends would remain low in the ensuing quarters due to consumer up stocking. Going ahead, government efforts to increase farmer’s wages and focus on rural infrastructure should boost oral care category. However, increase in competition and better product offerings by competitors like Dabur remains a key challenge for Colgate.
Outlook
We have revised our FY21E and FY22E EPS to Rs 32.5 (+7.3%) and Rs 33.8 (+1.6%), respectively to factor in Q1FY21 performance. We value the stock at 43x FY22 EPS to arrive at a TP of Rs 1,460. Maintain Reduce.For all recommendations report, click here
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