Colgate set to outperform as P&G's Oral B disappoints: IDFC

Brokerage firm IDFC has rated Colgate as an 'outperform' on the back of an unimpressive Oral B toothpaste launch from its rival of Procter and Gamble (P&G).

Earlier, analysts were concerned that sales of Colgate would take a hit along with jump in advertisement spending after Procter & Gamble's entry in India.

The brokerage says Oral B has managed to garner only 0.2 percent market share in July, both in volume and value terms. This was the first month of the launch. 

"What works against P&G is also the fact that the company is importing its entire requirement for the toothpaste. Given the fact that the company doesn’t have a third-party tie-up for manufacturing, it is likely to see some serious losses in the form of increasing duties and steep rupee depreciation," the IDFC note says.

"And the last card working in favour for Colgate is its track record of dealing with MNC competition and unmatched dominance in the category," the note says.

The brokerage has a target price of Rs 1436 on the stock.

(Posted by Ritika Dange)