MOSL: COLGATE (Neutral)-Sales growth remains tepid; outlook weak
COLGATE: Sales growth remains tepid; outlook weak
(CLGT IN, Mkt Cap USD5.6b, CMP INR1533, TP INR1690, 10% Upside, Neutral)
- CLGT’s 2QFY22 result was in line with our estimates. Two-year average sales growth, at 5.2% in 2QFY22, continues to remain in the 4-6% range seen in recent quarters, with little indication of an improvement, despite consistent advertising spends. With: a) the launch of the Non-Oral Care portfolio, and b) investments under the ‘brush twice a day’ campaign seemingly on the back burner, it is unlikely to return to double-digit sales growth seen over FY08–15 anytime soon. We maintain our Neutral view on weak topline growth, rising material cost pressures, and limited scope for price hikes.
- There is no evidence that the company is regaining lost market share in the core Oral Care business. At 13.7% of 2QFY22 sales, advertising spend increased by 15.7% sequentially, which we believe needs to sustain over a longer period of time to revive sales growth.
- We had downgraded the stock to Neutral post its 4QFY21 result. While valuations at 38.4x FY23E EPS may appear inexpensive v/s its Staples and Discretionary peers, mid-single-digit PBT and PAT CAGR do not warrant a change in our view. We maintain our Neutral rating
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.