KR Choksey's research report on Colgate-Palmolive India
Colgate Palmolive India Ltd posted its Q3FY18 results which were in line with our estimates. Net revenue reported at INR 10,333.2 Mn which showed growth of 4.2% YoY and de-growth of 4.8% QoQ. With this there was increase in volumes sales by 12%. Its 9MFY18 revenue was around 32,367.6 Mn with de-growth of 3.2% YoY. During Q3FY18 EBIDTA stood at INR 2,824.2 Mn with margins at 27.3% which improved by 32 bps YoY. We saw this improvement due to higher spending on advertisement. In 9MFY18, we saw an improvement in EBIDTA margins by 393 bps with margin at 24.9% which was due to cost saving strategies.
Outlook
Going ahead in FY19E and FY20E, we estimate revenue growth of around 7-9%, with improvement in EBIDTA margins at around 21-22% and PAT margins to be around 13.5% in FY19E & FY20E. At CMP INR 1,120, the stock is trading at EPS of INR 29.1 for FY20E. We are upgrading our target price to INR 1,200 and recommend “ACCUMULATE” rating on the stock with a potential upside of 7.1%.
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