Way2Wealth neutral on Colgate

Wey2Wealth has maintained neutral rating on Colgate Palmolive in its October 30, 2012 research report. The research firm says Colgate maintained its market share to 26.8% in this emerging segment this year. The company continued to follow its topline growth strategy of elevated ad spends to protect market share.

“Colgate, Topline for Q2FY13 grew by 17.7% to Rs773 crs.; driven by 10% volume growth and rest was a mix of price growth & product mix. Topline growth enabled the co. to maintain its leadership position. Company shared volume market share for toothpaste for Jan to Sept -2012 at 54.3% vs. 52.3% previous year corresponding period. The toothpaste segment witnessed volumes growth of 11%. Growth was driven by major brands such as “Colgate Dental Cream”, “Active Salt”, “MaxFresh”, “Colgate Sensitive” and Colgate Total.”

“The company regained lost ground in the toothbrush segment from 36.3% Oct 2010 to Sept 2011 to 39% for the period Jan-Sep 2012. The company is aggressively developing other dental products lines such as mouthwashes where penetration is low and growth opportunity is much larger. The company this year maintained its market share to 26.8% in this emerging segment. The company continued to follow its topline growth strategy of elevated ad spends to protect market share.”

“This leaves a huge opportunity of growth for players. Apart from HUL which is already present in this segment with Pepsodent, Glaxo increased focus on growth of this segment. The increasing competitive scenario in this oligopoly segment will hamper pricing power of the leader and maybe even entail margin pressure but fundamentals for growth of this segment are still intact. The oral care segment is ripe for growth. Penetration in India is low and habitually twice a day is yet to catch speed among the masses. After a difficult FY12 this quarter results affirm a comeback and sustainability for the company’s performance. At the CMP of Rs1285.3/- the stock currently trades at 34.2x forward EPS of Rs37.5 in FY13. The stock continues to trade at rich valuations pricing in fair levels of growth. We continue with our neutral view on the stock,” says Way2Wealth research report.

FIIs holding more than 30% in Indian cos 

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