Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Maintain ADD on Colgate Palmolive - Healthy domestic recovery; robust margin show - HDFC Securities

Posted On: 2020-10-22 01:36:06

Mr. Varun Lohchab, Head Institutional Research & Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities

Colgate reported a healthy 2QFY21 with 5% net revenue growth (HSIE 4.5%) and 7% domestic growth. Volume and price have equally contributed to the revenue growth. Toothpaste recovery was healthy (no sequential divergences) while toothbrush exit recovery was encouraging. Dental cream and Max fresh posted encouraging recovery. Naturals toothpaste continue to outperform (even as an industry) although the growth gap has gone down. Market share was stable during the quarter. GM expanded sharply (339bps YoY) owing to (1) price hike, (2) soft raw material and (3) favourable mix (lower revenue share of toothbrush and exports and higher share of larger pack size). We expect gradual growth recovery with healthy margin expansion in 2HFY21 and increase our estimates for FY21/22 by 6/1%. We value Colgate at 40x P/E on Sep-22E EPS and derive a target price of Rs 1,529. Maintain ADD.

Domestic revenue up 7%: Revenue grew by 5% YoY (+5% in 2QFY20 and -4% in 1QFY21), in line with our expectation. Improved penetration for most categories, along with several innovative launches by the company, led growth. Exports remained weak during the quarter, with a gradual recovery. Recovery in personal care was strong, and Toothbrush growth at exit indicated a quick revival in 2HFY21. Colgate is not expecting incremental downtrading, as mass and mid segments are growing well.

Robust >500bps EBITDA margin expansion: GM saw a sharp expansion of 339bps YoY (-2bps in 2QFY20 and +28bps in 1QFY21) vs. the expectation of +26bps YoY expansion. Employee expenses grew by 18% YoY while cost control initiatives led to ASP/Other expenses declining by 7/2% YoY. EBITDA margin was robust and saw an expansion of 540bps YoY to 31.8% (-178bps in 2QFY20 and +196bps in 1QFY21). EBITDA grew by 27% YoY (HSIE 12%). We expect margin expansion to continue in the near term, considering price hike and benign RM prices. PBT clocked 32% YoY growth while PAT grew by 12% YoY due to lower tax rate in the base quarter.

Shares of COLGATE-PALMOLIVE (INDIA) LTD. was last trading in BSE at Rs.1425.35 as compared to the previous close of Rs. 1462.75. The total number of shares traded during the day was 68460 in over 5243 trades.

The stock hit an intraday high of Rs. 1479.3 and intraday low of 1407. The net turnover during the day was Rs. 98742348.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Rupee - Nov 24, 2020 - Reliance Securities

FMCG Sector Update - Recovery unlocked; lower growth divergence - HDFC Securities

Engineers India - Consultancy segment outperformance - ICICI Securities

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Motherson Sumi Systems - Company Update - Virtual Investor Conference - ICICI Direct

Mutual Fund Review - November, 2020 - ICICI Direct

Sadbhav Engineering - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

Vodafone Idea fund raising - Angel Broking

Rupee - Nov 23, 2020 - Reliance Securities

Crude Oil - Nov 23, 2020 - Reliance Securities

Q2FY21 Bank Result Quick Review - Angel Broking

Banks & NBFC's Sector Update Report - Yet another watershed moment? - HDFC Securities

Galaxy Surfactants - EBITDA/kg has an upside risk - ICICI Securities

Diagnostics - COVID-19 tests continue to trend higher - ICICI Securities

Banking & Financial Services - Sector Update - Nov 22, 2020 - ICICI Direct

Dalmia Bharat Sugar - Q2FY21 Company Update - ICICI Direct

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Covid Recovery Pulse - Festive positivity continues in auto retails, E-way bill generation improves... - ICICI Direct

Quant Pick - Exide Industries - ICICI Direct

Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Triveni Engineering - Q2FY21 Company Update - ICICI Direct

Initiating Coverage on Sudarshan Chemical - Leaping into the league of giants - HDFC Securities

Earnings Wrap Q2FY21: Earnings outperform, post Covid recovery picks up steam - ICICI Direct

Vodafone Idea Positive development beneficial for IDFC first bank - Angel Broking

Lakshmi Vilas Bank - Angel Broking

WIPRO Buyback record date announcement - Angel Broking

TCS buyback record date announcement - Angel Broking

Banks Sector Update - Collection efficiency - a positive surprise! - HDFC Securities

Quant Pick - Max Financial Services - ICICI Direct

Graphite India - Q2FY21 Result Update - ICICI Direct

Gladiator Stocks - Maruti Suzuki India - ICICI Direct

Exide Industries - Q2FY21 Result Update - ICICI Direct

Mishra Dhatu Nigam - Execution outlook remains strong - ICICI Securities

Bharat Electronics - Diversifying into multiple revenue streams - ICICI Securities

Wipro Ltd - Virtual Analyst Meet Update - ICICI Direct

Avadh Sugar & Energy - November 2020 - Company Update - ICICI Direct

Mahindra Lifespace Developers - H1FY21 Company Update - ICICI Direct

Quant Pick - Godrej Consumer Products - ICICI Direct

India Equity Strategy Report - Quarterly flipbook - HDFC Securities

Maintain REDUCE on Jubilant FoodWorks - Recovery continues; priced-in - HDFC Securities

Maintain BUY on Ahluwalia Contracts - Q2FY21 - Significant beat on execution - HDFC Securities

Repco Home Finance Limited - Q2 FY21 Result Update - YES Securities

JK Lakshmi Cement - Target upgrade - Angel Broking

BUY on Petronet LNG - Stellar quarter - HDFC Securities

Maintain BUY on Prestige Estates Projects - Capex cycle to gather pace - HDFC Securities

REDUCE on LIC Housing Finance - Tread with caution - HDFC Securities

SELL on New India Assurance - High claims ratio dents profits - HDFC Securities

New orders for L&T - Angel Broking

Cipla - Multi-G agreement - Angel Broing

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019