Prabhudas Lilladher's research report on Colgate Palmolive
CLGT reported tepid numbers with ~3% decline in volumes on poor demand, more so in rural India. CLGT continues to suffer on account of poor volumes, input cost inflation and high competitive intensity in core segments of oral care. Premium segments are doing well even as innovations like electric tooth brushes and face care launches are doing well. CLGT is focusing on accelerating growth led by 1) Ramping up innovations (Colgate Gum Expert, Colgate Visible White 2) 2) Increasing promotion intensity 3) Entry into premium face cleansing category (foams, scrubs and masques under Palmolive brand). We estimate 7.8% Sales and 7.7% PAT CAGR over FY22-24. Although CLGT’s growth is unexciting, favorable financial parameters (34x FY24PE, 2.6% Dividend yield, 90%+ payout and 80% ROCE) limit downside.
We value CLGT at 37xFY24 EPS and assign a Target of Rs 1701 (earlier Rs 1708 on 37xFY24 EPS). Retain Accumulate.
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