Colgate-Palmolive - Nice but still in the price

Q3FY10 results review - ICICI Securities

Colgate-Palmolive India continues to grow ahead of the industry. On the back of healthy category growth and market share gains, Colgate registered a robust volume growth of 13% YoY in Q3FY10. On account of healthy volumes, net sales grew 17%. Toothpastes continue to gain market share and rose to 51.4% in Q3FY10. Increase in ad spends by 59% YoY was offset by a decline in other expenses and resulted in operating profits growing 33% YoY. Operating profit margin (OPM) expanded 301bps to reach 24.7% this quarter. Recurring profits grew 36% YoY to Rs1.1bn in Q3FY10. We maintain our positive outlook on the company, but completion of tax holiday will mute FY11 earnings growth. Also, at FY11 P/E of 22x, the stock is not cheap. Maintain HOLD with a 12-month revised target price of Rs678.

Source : Equity Bulls

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