Moneycontrol
Mar 20, 2017 04:09 PM IST | Source: Moneycontrol.com

Buy Colgate; target of Rs 1170: Motilal Oswal

Motilal Oswal is bullish on Colgate has recommended buy rating on the stock with a target price of Rs 1170 in its research report dated March 17, 2017.

Buy Colgate; target of Rs 1170: Motilal Oswal

Motilal Oswal's research report on Colgate


We met the management of Colgate Palmolive (India), and as usual, came back enthused about its longer-term business prospects. The company has weathered the storm from herbal players like Patanjali, with minimal damage to its market share in the last three quarters. We believe the sharp dip towards the end of FY16 was only a small blip in what has been a longer-term uptrend in market share.


Outlook


Valuations are lower than the average 3-year and 5-year multiples. We roll forward to March 2019 numbers, maintain our target multiple at 37x (5% discount to 3-year average), which begets a target price of INR 1,170 (INR 1,115 earlier), a 19% upside. CLGT has best-of-breed RoE, strong earnings growth prospects, and best-in-class dividend yield, which is likely to rise rapidly now that a major part of the capex is over. We maintain Buy.


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