MOSL: Colgate (Buy)-Great play on rural growth-Government policies in place-watch for normal monsoon
​Colgate: Great play on rural growth; Government policies in place; watch for normal monsoon
(CLGT IN, Mkt Cap USD4.0b, INR989, TP INR1170, 18% Upside, Buy)
- ​We met the management of Colgate Palmolive (India), and as usual, came back enthused about its longer-term business prospects. The company has weathered the storm from herbal players like Patanjali, with minimal damage to its market share in the last three quarters. We believe the sharp dip towards the end of FY16 was only a small blip in what has been a longer-term uptrend in market share.
- Given its rural dominance, CLGT is a great play on rural recovery. Of the two components driving rural growth, government schemes are falling in place and if the monsoon is near-normal this year too, CLGT should see a sharp revival in earnings growth off a low base. FY15 and FY16 witnessed lower than normal monsoons and the benefits of the near-normal monsoon in FY17 were washed away by the tide of demonetization.
- We remain admirers of the tremendous business franchise CLGT has in India, with its barriers to entry in the form of distribution reach, brand strength, single-minded category focus, and category development efforts. It has been upping the ante on innovation, advertising, and premiumization.
Colgate Palmolive (India) Limited is engaged in the personal care and oral care business. The Company offers various personal care products, such as soaps, cosmetics and toilet preparations. The Company's oral care category of products includes toothpastes, toothbrushes, toothpowder, whitening products and mouthwash. In the toothpaste category, the Company offers products, including Colgate Total Charcoal Deep Clean Toothpaste, Colgate Active Salt Neem Toothpaste and Colgate Sensitive Pro-Relief (CSPR) Enamel Repair Toothpaste. In the toothbrush category, the Company offers the Colgate 360 degree Toothbrush range, including 360 degree Charcoal Gold, 360 degree Whole Mouth Clean, 360 degree Visible White and 360 degree Floss-Tip, and Colgate ZigZag Black Toothbrush. In the Personal Care category, the Company offers Palmolive's Foaming Hand Wash range in approximately two variants.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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