Hold Colgate Palmolive; target of Rs 1200: Edelweiss

Edelweiss's research report on Colgate Palmolive

We met Mr. Issam Bachaalani, VP, Colgate Palmolive, India & South Asia, and other top management of Colgate Palmolive (Colgate). Key takeaways are: i) market share loss in toothpaste seems to have bottomed but believe recovery will be gradual; ii) new launches—Colgate Swarna Vedshakti and Cibaca Vedshakti—have gained desired traction without cannibalisation; iii) competitive intensity continues to remain elevated; and iv) renewed vigor in Palmolive range of personal care would be led by new launches.

Outlook

We expect Colgate’s innovation funnel and brand investments to sustain. However, competitive intensity and MS gains are key monitorables. We retain our target multiple of 38x FY20 EPS to arrive at TP of INR1,200. At CMP, the stock is trading at 33.5x FY20E EPS. Maintain ‘HOLD/SP’. For all recommendations report, click here

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