MOSL: COLGATE (Buy)-Market share stability attained, but near-term margins under pressure
Colgate: Market share stability attained, but near-term margins under pressure
(CLGT IN, Mkt Cap USD4.6b, CMP INR1182, TP INR1375, 16% Upside, Buy)
- CLGT's volumes grew 5% YoY (our estimate: +6%) in 4QFY19. Net sales increased 5.7% YoY to INR11.5b (our estimate: INR11.9b). EBITDA was up 0.9% YoY to INR3.1b (our estimate: INR3.4b), while adj. PAT increased 1.7% YoY to INR2b (our estimate: INR2b).
- FY19 performance: Sales grew 6.6% (with ~5% toothpaste volume growth). EBITDA and adj. PAT were up 11% each. EBITDA margin expanded 110bp YoY to 27.7%.
- Concall highlights: (1) Market share hemorrhage is behind after more than three years, with exit market share for both Mar'19 and Dec'18 similar to CY18 market share of 52%. (2) Management will prioritize growth even if it comes at the cost of near-term EBITDA margins. (3) Direct reach was ramped up by 30% over the past year.
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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