Prabhudas Lilladher research report on Colgate Palmolive (India)CLGT’s 2QFY16 volume growth of 3% continues to disappoint, while margins received a boost due to lower adspend and benign input costs. While CLGT has lost 30bps market share QoQ, mainly to Dabur, we don’t see it as a long term threat given product innovations like Active salt Neem, Total Charcoal, Pro Sensitive enamel repair and Sugar Acid neutraliser. CLGT should sustain its edge in oral care given extensive investments in product innovation and facilities (Sri City and Sanand). Potential aggression by P&G, Patanjali and Dabur is a potential threat. We expect volume growth to recover from 4.5% in FY16 to 8.5% in FY18E on the back of 1) strong brand presence 2) steady increase in distribution and 3) uptick in demand. We estimate 10% PAT growth in FY16 (excise and tax rate impact) and 18.5% PAT CAGR over FY16‐18. We expect premium valuations to sustain given encouraging long term outlook. Retain “Accumulate”For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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