Hold Colgate Palmolive India; target of Rs 1135: JM Financial

JM Financial recommended hold rating on Colgate Palmolive India with a target price of Rs 1135 in its research report dated August 03, 2017.

August 04, 2017 / 18:07 IST

26 Aug, 2025 12:21

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JM Financial's research report on Colgate Palmolive India

Colgate’s operating performance was expectedly muted in 1QFY18 with volumes down 5% YoY (vs expectation of - 4%). Net sales realisation growth, though, was much lower than what we expected (details below) which resulted in a c.3% revenue decline (vs forecast of 3% growth). The company surprisingly effected a 7.9% cut in A&P spends which helped drive a 5% operating profit growth. The key positive highlight, though, was the stability in toothpaste market share (on sequential comparison) at 54.3% after witnessing continuous decline since mid - 2015. On the negative side, toothbrush seems to have lost share after consecutive quarters of gain for a significant stretch of time. Colgate seems to have increased focus on its Palmolive personal - care business which witnessed some launches in the male - grooming space during the quarter.

Outlook

We like Colgate’s business model but at 43 - 44x NTM earnings, upside on the stock appears limited, given subdued business momentum.

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