Shares of Colgate were lower by over 1.5 percent on Friday morning as investors reacted to the June quarter results.
The stock touched an intraday high of Rs 1,096.00 and an intraday low of Rs 1,067.50.
FMCG major, Colgate-Palmolive India Thursday reported a 39 percent (year on year) rise in net profit for the June quarter at Rs 189.51 crore. The company had reported a profit of Rs 136.38 crore for the corresponding quarter of last year.
The profit was driven by an improvement in operating margins, led by lower raw material prices and aggressive cost reduction measures.
A Reuters poll of analysts had estimated net profit for June quarter at Rs 160 crore.
Revenue from operations grew by 6.5 percent to Rs 1,041.3 crore from Rs 978.1 crore YoY. Operating profit for June quarter increased 26.6 percent to Rs 281.6 crore from Rs 222.4 crore in same period last year. The firm reported an operating margin of 27 percent, up against 22.7 percent during the same period of last year.
Brokerages have termed the earnings to be a mixed bag, with clouds over revenue growth as well as growth in toothpaste business.
Brokerage: Credit Suisse | Rating: Neutral | Target: Cut to Rs 1,150 from Rs 1,225
The brokerage said that the firm’s volume and market share trends further weakened. But it delivered a strong operating margin on the back of gross margins. Since GST rate cuts, there has been steep jump in margins, it observed. But, Colgate is still struggling in naturals.
Brokerage: JPMorgan | Rating: Overweight | Target: Rs 1,400
The global research firm said that Q1 was a mixed bag, but revenue growth remained unexciting. The earnings beat, it said, was led by margins. The Market share trends were soft and going forward there could be gradual volume growth revival in coming quarters. Healthy cash flow generation, return ratios and improved dividend payout will support the stock, it said.
Brokerage: Morgan Stanley | Rating: Underweight | Target: Rs 1,035
The financial services firm said that earnings were a beat, but toothpaste volume growth remains weak. Domestic volume growth at 4% lower than 6-7% estimate that the brokerage had.
Brokerage: Kotak Institutional Equities | Rating: Add | Target: Cut to Rs 1,250 from Rs 1,300
The brokerage said that the company reported modest 4% volume growth on a weak base. The firm is not wresting back any of the lost share. While earnings came ahead of expectations, it was led by tight leash on costs. The company’s response to competition has been uninspiring. Having said that, strong brand equity & inexpensive valuations underpin positive stance.
Brokerage: Jefferies | Rating: Hold | Target: Rs 1,220
The brokerage house has cut EPS estimates by 2-3 percent for FY19/20. It expects ad spends to go up and gross margins to peak out. The company needs to sacrifice margins by stepping up innovation, ad spends, it said adding that upside triggers in the stock are missing.
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