Accumulate Colgate Palmolive (India); target of Rs 1329: Dolat Capital

Dolat Capital's research report on Colgate Palmolive (India)

The Q1FY20 results were in line with our expectation. On a base of 4%, the company’s volume rose 4%. We view this as a decent performance, considering the slowdown in most consumer categories and intense competition in the oral care category. The launch of Swarna Vedshakti and corrective action in the natural portfolio continues to yield benefits We believe that its volume growth should recover further on a favorable base. Also, as the distribution reach of Swarna Vedshakti continues to rise, the company’s market share in the natural category is likely to increase further. The deceleration in Patanjali sales should also help Colgate to regain some lost market share.

Outlook

We maintain our FY20E and FY21E EPS at `30.7 and `33.2, respectively, as our hypothesis of improvement in volume growth seems to be true. We value the stock at 40x FY21 EPS to arrive at a TP of ` 1,329. Maintain Accumulate.