Colgate - 1QFY2013 Result Update - Angel Broking

For 1QFY2013, Colgate posted a healthy 16.9% yoy growth in its bottom line to Rs.117cr, with the volume growth coming in at a healthy ~11% yoy. The company's OPM stood flat on a yoy basis at 19.4% as improvement in realization was offset by increase in operating expenses.

Steady growth in oral care: During 1QFY2013, Colgate posted 20.5% yoy growth in its net sales to Rs.736cr The company has further consolidated its leadership position in the toothpaste category, with its volume market share going up to 54.5% in June 2012 from 54.2% in June 2011. The company's volume market share in the toothbrush category rose to 38.2% in June 2012 from 36.3% in June 2011. OPM remained flat yoy at 19.4%. As per the management, the company was able to maintain its operational margin due to its focused programs to enhance efficiencies and reduce costs. Net profit for the quarter rose by 16.9% yoy to Rs.117cr.

Outlook and valuation: During FY2012-14E, we expect Colgate to report a 12.8% CAGR in its top line and ~11.7% CAGR in its earnings over FY2012-14E. At the CMP, the stock is trading at 28.5x FY2014E EPS. We see limited upside in the stock price from current levels; hence, we maintain our Neutral rating on the stock.

Source : Equity Bulls

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