Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Research

| More

Maintain ADD on Colgate Palmolive - Muted Q4, signs of improving execution - HDFC Securities

Posted On: 2020-05-26 13:52:53


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

Colgate Palmolive (Q4FY20): Muted Q4, signs of improving execution. Maintain ADD
(TP Rs 1,328, CMP Rs 1,313, MCap Rs 357bn)

Colgate saw a 7% yoy dip in its revenues as lockdown impacted primary sales. However, co witnessed positive momentum pre-Covid with market share gain for toothpaste. Most personal care companies / categories struggled in 4Q (HUL BPC down by 14% yoy, Marico PCNO/VAHO down by 12/18% yoy, GCPL India business down 18% yoy and Gillette down 13% yoy). We believe oral care being an essential category will recover quickly and revenue loss due to channel disruption will be minimal (unlike many FMCG categories). Co's new launches are exciting and expect similar aggression in the coming years. Focus on MT/Ecomm channel will continue to drive its premium portfolio and market share gain (160/200bps yoy market share gain in MT/Ecomm channel in 4Q). Co expects to expand its gross margin and is investing behind its brands. We cut EPS estimates for FY21/FY22 by 3% to factor in subdued category growth and moderation in premiumisation trend. We value COLGATE at 38x on Mar-22E EPS, deriving a TP of Rs 1,328. Maintain ADD.

Revenue decline of 7%: Revenue declined by 7% yoy (+6% in 4QFY19 and +4% in 3QFY20) vs our estimate of flat revenue. Volume declined by 8% (+5% in 4QFY19 and +2% in 3QFY20). Given loss of sales in last 10 days of March, we believe volume growth was 2.5-3% pre-Covid (similar to 3Q trend). New launches like Charcoal clean and PC products like essential oil shampoos, body washes, etc under Palmolive saw strong traction. Launches like Naturals toothrushes and new marketing campaign for Vedshakti aided revenue growth pre-Covid. Co has also launched hand sanitizers in April.

EBITDA margin dip by 234bps yoy: GM was up by 9bps yoy (-57bps in 4QFY19 and +99bps in 3QFY20) to 64.7% (lower than estimates). Employee expenses were up by 22% while ASP/other expenses saw a decline of 1/10%. ASP acceleration was missing in FY19 (up 7% yoy) but grew by 15/9% yoy in 9MFY20/FY20. This reflects that management has stepped up aggression wrt investment behind its brands. EBITDA margin was down by 237bps to 24.5% (-127bps in 4QFY19 and -105bps in 3QFY20). EBITDA declined by 15% (+1% in 4QFY19, flat in 3QFY20). Higher other income (+64% yoy) and lower taxes led to a 3% growth in PAT to Rs 2.04bn (est Rs 1.99bn).

Call & other takeaways: (1) Co has increased its focus on Ecomm by constituting a dedicated team to drive growth, (2) Market share gains across its portfolio in 4QFY20, in March co gained 80bps yoy market share, (3) Toothpaste category growth in 2019 was at 4% yoy with flat volume. In 4QFY20, growth was 2% yoy with 3% volume dip, (4) Cash & equivalents are at Rs 4.8bn which is an improvement over Rs 4.2bn in FY19, (5) Co has repaid its debt which was Rs 777mn in FY19.

Shares of COLGATE-PALMOLIVE (INDIA) LTD. was last trading in BSE at Rs.1313.55 as compared to the previous close of Rs. 1333.9. The total number of shares traded during the day was 35361 in over 2829 trades.

The stock hit an intraday high of Rs. 1343.8 and intraday low of 1309. The net turnover during the day was Rs. 46920375.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


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. www.equitybulls.com, 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. www.equitybulls.com 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:

Real Estate (Sector Update) - Greenshoots visible - HDFC Securities

Cement (Sector Update) - Prices, retail sales hold up despite COVID - HDFC Securities

TCI Express - Branch economics, cost levers as margin tailwinds - ICICI Securities

Mishra Dhatu Nigam - Space order inflow may slow down in FY21 - ICICI Securities

Century Plyboards - Compelling BUY; top pick in building materials - ICICI Securities

Building material - Sector Update - ICICI Securities

ISGEC Heavy Engineering - On a strong footing despite macro headwinds - ICICI Securities

Telecom - Growth breaks due to Covid-19 crisis - ICICI Securities

Pfizer Ltd - Company Update - ICICI Securities

Petronet LNG - Quant Pick - ICICI Securities

Earnings Wrap Q4FY20: Quarter end lockdown takes toll, one-offs rule Q4FY20

Autos & Transportation Sector Update Report - Focus on '3Cs' - HDFC Securities

Banking Sector Credit Trends - Weakness building - HDFC Securities

India Equity Strategy Report - Back to pre-covid levels - HDFC Securities

Strategy: Cyclicals to lead earnings recovery over FY20-22 - ICICI Securities

JK Cement - Ripe for re-rating - ICICI Securities

Phillips Carbon Black - Company Update - ICICI Securities

Information Technology - Q1FY21 Result Preview - ICICI Securities

Motherson Sumi Systems Ltd - Company Update - ICICI Securities

HDFC Ltd - Quant Pick - ICICI Securities

Auto Sales Data for June 2020 - Angel Broking

FMCG - Sector Review 4QFY20 - Disruption visible, growth divergence increases - HDFC Securities

Maintain ADD on ONGC - Impairment loss drags earnings - HDFC Securities

Maintain BUY on Ahluwalia Contracts - Looking ahead - HDFC Securities

RIL-Intel Deal - Angel Broking

Strategy: 'Out of turn' change in NIFTY50 due to Vedanta delisting - ICICI Securities

Time Technoplast - Q4FY20 Result Update - ICICI Securities

Monthly Auto Volumes - July 2020 - ICICI Securities

Oil & Natural Gas Corporation - Q4FY20 Result Update - ICICI Securities

Minda Industries - Q4 FY20 Result Update - ICICI Securities

Auto Sales - June 2020 - Acuité Ratings & Research

Bharat Electronics - Q4FY20 Result Update - ICICI Securities

Petronet LNG - Q4FY20 Result Update - ICICI Securities

Tata Steel - Q4FY20 Result Update - ICICI Securities

Phoenix Mills - Q4FY20 Result Update - ICICI Securities

Jun-20 Volumes expectations: Sales to rise over 2x from May-20 levels for Hero, Maruti - HDFC Securities

Maintain REDUCE on RBL Bank - Risks more evident - HDFC Securities

Maintain ADD on Subros - Expect market share gains to continue - HDFC Securities

Maintain ADD on Petronet LNG - One offs in opex drag profitability - HDFC Securities

Siyaram Silk Mills - Company Update - ICICI Securities

Vardhman Textiles - Company Update - ICICI Securities

Bharat Forge - Q4FY20 Result Update - ICICI Securities

CESC - Q4FY20 Result Update - ICICI Securities

Star Cement - Company Update - ICICI Securities

BUY on GIC Reinsurance - Arduous Road Ahead - HDFC Securities

ADD on Oil India - Excess provisions drag EBITDA - HDFC Securities

Maintain BUY on Sobha - Well placed for recovery - HDFC Securities

Maintain REDUCE on Emami - Miss on all fronts - HDFC Securities

BUY on Galaxy Surfactants - Higher per unit EBITDA leads profitability - ICICI Securities

Maintain BUY on J. Kumar Infraprojects - Migration headwinds - HDFC Securities







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

disclaimer copyright © 2005 - 2019