ICICI Direct recommended hold rating on Colgate-Palmolive India with a target price of Rs 990 in its research report dated May 16, 2017.
ICICI Direct's research report on Colgate-Palmolive India
CPIL is the largest player in oral care in India with a market share of 55.6% in toothpaste and 47.3% in toothbrush category in CY16. Though the entry of Patanjali has disrupted the toothpaste category, denting CPIL’s market share by 180 bps in past year, HUL has been impacted more with a market share loss of ~370 bps in 2013-16.
On account of higher advertisement expense and expected increase in raw material cost, we expect the EBITDA margin to remain capped at 20.8% for FY19E. We reiterate our HOLD rating on the stock with a target price of Rs 990/share valuing it at 38x FY19E EPS.
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