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MOSL: Morning India (27/November/19): 1. Colgate (Poised for strong earnings growth over medium term); 2. Interglobe Aviation; 3. Hospitality; 4. Expert Speak (Financials)

MOrning India (27/November/19): 1. Colgate (Poised for strong earnings growth over medium term); 2. Interglobe Aviation; 3. Hospitality; 4. Expert Speak (Financials)MOrning India (27/November/19): 1. Colgate (Poised for strong earnings growth over medium term); 2. Interglobe Aviation; 3. Hospitality; 4. Expert Speak (Financials)
Today’s top research ideaColgate: Poised for strong earnings growth over medium termWe recently met Colgate's (CLGT) management. Key highlights:
** CLGT's market share has been stable over the past few quarters.
** Volume growth and market share expansion have taken precedence even if it is at the cost of near-term profitability.
** Direct reach has increased by 30% over the past year.
** Category Premiumization is back. No material downtrading is happening either.
** No material capex required until Dec'22.
** In our note post the corporate tax cut, we had included Colgate (CLGT) among our top picks. In another note on CLGT earlier this month, we had examined past instances among Indian MNCs where management change heralded a significant change in the strategy for the better. We remain bullish on CLGT from the medium-term perspective, given its reasonable valuations (39.7x FY21E EPS - a huge discount to MNC peer multiples of 50x-56x), likely escalation in earnings momentum and sharp potential improvement in the already impressive RoCE.
Piping hot newsRBI deputy governor red-flags rising stress in Mudra loansReserve Bank deputy governor MK Jain on Tuesday warned bankers about the growing stress in Mudra loans, which has crossed more than Rs 3.21 lakh crore RPT crore system-wide, and asked them to monitor such loans closely as unsustainable credit growth in the sector can risk the system. Prime Minister Narendra Modi had launched the Mudra scheme in April 2015 with much fanfare to offer speedier credit up to Rs 10 lakh to small businesses which are non- corporate, non-farm small/micro enterprises and which normally do not get bank funds due to their poor and mostly no credit rating. These loans are extended by banks, NBFCs, RRBs, cooperative banks and small finance banks.