Colgate jumps 2% post earnings; Credit Suisse raises target to Rs 1,625/sh
The research firm has cut earnings by 1 percent to build in higher ad spends and lower margin
January 31, 2020 / 11:11 AM IST
Colgate Palmolive share price jumped over 2 percent intraday on January 31 after the company reported a 3.6 percent jump in its third quarter net profit at Rs 199.1 crore versus Rs 192.1 crore in the same quarter last fiscal.
Excluding the impact of prior year tax reversals, the net profit after tax increased 9 percent in the current year, the company said. The company’s revenue rose 5.9 percent at Rs 1,147 crore against Rs 1,083.7 crore, YoY.
Earnings before interest, tax, depreciation and amortisation (EBITDA) were up 5.8 percent at Rs 316 crore against Rs 314.5 crore and margin was down at 27.5 percent versus 28.6 percent, YoY.
Global research firm Credit Suisse has maintained an outperform rating on the stock and has cut target to Rs 1,600 from Rs 1,625 per share. The firm is of the view that growth slowdown is due to macro, margins drop on higher advertisement spends.
The research firm has cut earnings by 1 percent to build in higher ad spends and lower margin. However, it is of the view that the company is likely to be a turnaround case after share loss over the past three years.
"The current quarter continued to witness demand moderation and soft consumer sentiments. The company reported a net sales growth of 4.1 percent despite category headwinds in both rural and urban," said Ram Raghavan, Managing Director at Colgate-Palmolive (India).
At 10:34 hrs Colgate Palmolive (India) was quoting at Rs 1,362, down Rs 33.75, or 2.42 percent. It has touched an intraday high of Rs 1,402.50 and an intraday low of Rs 1,350.