November 07, 2016 / 18:36 IST
Net revenue of Colgate-Palmolive (India) grew by 9.4% yoy to Rs 10.5 bn, while net profit increased 15.6% yoy to Rs 1.8 bn in 2QFY17. The Company’s overall volume grew by 4% yoy during the quarter. Notably, prior period tax reversal worth Rs 142 mn aided growth in net profit. We estimate 12.9% & 13.5% CAGR in revenue and earnings, respectively through FY16-18E.
Recovery in volume growth and level of A&P spends would be a key factor to watch out for, going forward. We estimate Colgate to post revenues of Rs 46.4 bn & Rs 52.7 bn and PAT of Rs 6.5 bn & Rs 7.4 bn in FY17E & FY18E, respectively. At CMP, the stock is currently trading at 35.6x FY18E earnings. With the current risk reward ratio remaining favourable, we upgrade our recommendation on the stock to BUY from HOLD with a revised Target Price of Rs 1,105 (from Rs 1,055 earlier).
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