Accumulate Colgate Palmolive (India); target of Rs 1753: KR Choksey

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

In Q2FY23, CLGT reported revenue of INR 13,875 mn (+2.6% YoY/ +15.9% QoQ). For H1FY23, revenue was at INR 25,843 mn (+2.6% YoY). EBITDA for Q2FY23 was INR 4,080 mn (+1.8% YoY/ +25.3% QoQ). EBITDA margin for the quarter was at 29.4%, which was a contraction of 23 bps YoY but an improvement of 219 bps QoQ, despite the pressure on gross margins. EBITDA margin for H1FY23 contracted by 163 bps YoY to 28.4%. Adj. Net Profit for Q2FY23 was at INR 2,780 mn (+3.3% YoY/ +26.9% QoQ). Adj. Net profit for H1FY23 declined by 1.1% YoY to INR 4,970 mn.

Outlook

We apply P/E multiple of 38.2x on FY24E EPS of INR 45.9 and arrive at a target price of INR 1,753 per share (unchanged), having an upside potential of 9.1% from CMP. Accordingly, we maintain our rating at “Accumulate” on the shares of Colgate Palmolive India.