Buy Colgate Palmolive, target of Rs 481: Angel

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Buy Colgate Palmolive, target of Rs 481: Angel

Angel Broking has recommended a buy rating on Colgate Palmolive (India) with a revised target price of Rs 481. For 4QFY2008, Colgate Palmolive (India) posted a steady Topline growth of 14% yoy to Rs 391 crore (Rs 343 crore) in-line with research firm's estimate of a 13.8% growth to Rs 390 crore.

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Angel Broking has recommended a buy rating on Colgate Palmolive (India) with a revised target price of Rs 481 in its May 30, 2008 research report. "For 4QFY2008, Colgate Palmolive (India) posted a steady Topline growth of 14% yoy to Rs 391 crore (Rs 343 crore) in-line with our estimate of a 13.8% growth to Rs 390 crore. Colgate India's earnings for the quarter (before exceptional items) registered a muted growth of 11.7% yoy to Rs 55.6 crore (Rs 50.6 crore) below our expectation of Rs 61.6 crore, a yoy growth of 24%."

"Given Colgate's strong parentage and leadership position in the Oral Care market in India coupled with its ability to withstand competitive pressure (as witnessed in constant marketshare gains), we remain bullish on the future performance of the company. However, escalating input costs (particularly inflationary trend in packaging material) coupled with high advertising expenses is likely to put pressure on Margins. Hence, we have marginally downgraded our earnings estimates for FY2009E and FY2010E by 1.7% and 3.6% respectively factoring in lower EBITDA Margins. At the CMP of Rs 416, the stock trades at 18.3x FY2010E revised EPS of Rs 22.9 (Rs 23.7) and 17.4x EV/EBITDA. We recommend a Buy on the stock, with a revised target price of Rs 481 (Rs 489)," says Angel's research report.

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