Neutral Colgate; target of Rs 1830: Motilal Oswal

neutral

Motilal Oswal's research report on Colgate

CLGT reported better-than-expected operating performance, driven by early signs of recovery in rural markets. It reported double-digit sale growth (up 10.6% YoY). GP margin exceeded expectations, reaching 68.4% (est. 66.8%), driven by the growth of the oral care category. Furthermore, a decrease in staff costs and other expenses led to 440bpYoY improvement in EBITDA margin. The company will continue to focus on innovation, productivity, and premiumization to revive growth. With a cautious near-term outlook on demand, we reiterate our Neutral rating on the stock.

Outlook

The valuation will arrive at a TP of INR1,830 (target multiple of 38x FY25E EPS, close to five-year average). Therefore, we reiterate our Neutral rating on the stock.

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Colgate - 27 -07 - 2023 - moti