Hold Colgate-Palmolive India; target of Rs 990: ICICI Direct

ICICI Direct's research report on Colgate-Palmolive India

CPIL is the largest player in oral care in India with a market share of 55.6% in toothpaste and 47.3% in toothbrush category in CY16. Though the entry of Patanjali has disrupted the toothpaste category, denting CPIL’s market share by 180 bps in past year, HUL has been impacted more with a market share loss of ~370 bps in 2013-16.

Outlook

On account of higher advertisement expense and expected increase in raw material cost, we expect the EBITDA margin to remain capped at 20.8% for FY19E. We reiterate our HOLD rating on the stock with a target price of Rs 990/share valuing it at 38x FY19E EPS.