Sell Colgate India; target of Rs 920: Religare
Religare is bearish on Colgate India has recommended sell rating on the stock with a target price of Rs 920 in its research report dated October 28, 2016.
November 07, 2016 / 13:50 IST
CLGT’s Q2FY17 net sales grew 9.4% YoY with volumes up 4%. Toothpaste market share contracted 190bps YoY and 20bps QoQ to 55.7% in Jan-Sep’16. Q2 EBITDA margins contracted 40bps YoY to 26% due to a 180bps increase in advertising spends, restricting operating profit growth to 8.1% YoY at Rs 2.7bn while adj. PAT grew 6.6% to Rs 1.7 bn. We like CLGT’s established franchise but believe the weak macro climate and continued high advertising spends make the stock’s risk-reward profile unfavourable. Maintain SELL.
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