Accumulate Colgate Palmolive (India); target of Rs 1638: KR Choksey

KR Choksey's research report on Colgate Palmolive (India)

In Q3FY23, CLGT reported revenue from operations of INR 12,913 mn (+0.9% YoY/ -6.9% QoQ). Demand for oral care products continued to be subdued during the quarter due to adverse macro factors. For 9MFY23, revenue from operations was INR 38,756 mn (+2.0% YoY). EBITDA for the quarter declined by 5.0% YoY/ 11.4% QoQ to INR 3,615 mn. EBITDA margin contracted by 174 bps YoY/ 141 bps QoQ to 28.0%. For 9MFY23, EBITDA and EBITDA margin declined by 3.6%/ 166 bps YoY, respectively. Net Profit for Q3FY23 declined by 3.6% YoY/ 12.5% QoQ to INR 2,432 mn. Net Profit margin contracted by 87 bps YoY/ 120 bps QoQ to 18.8%. For 9MFY23, Net Profit declined by 3.2% YoY to INR 7,309 mn and Net Profit margin declined by 101 bps to 18.9%.

Outlook

We apply P/E multiple of 35.0x on FY25E EPS of INR 46.8 and arrive at a target price of INR 1,638 per share (reduced from INR 1,753 earlier), having an upside potential of 11.9% from CMP. Accordingly, we maintain our rating at “Accumulate” on the shares of Colgate Palmolive India.