Hold Colgate - Karvy

Colgate: (CMP: Rs. 1,236; Target Price: Rs. 1,322) - HOLD

Colgate-Palmolive is expected to maintain EBITDA margin at ~21-22% in FY13 & FY14 owing to favorable revenue mix and better price growth expectation. The Company is expected to sustain its volume growth owing to its regular launches, higher rural focus and continued dental awareness programmes. However, we believe that its A&P spend would continue to remain higher in FY13 & FY14 in order to maintain the healthy volume growth.

Outlook & Valuation: Based on give 26x P/E on 24-month forward earnings, we initiate coverage on Colgate-Palmolive with "HOLD" recommendation with a target price Rs 1,322 apiece.

Source : Equity Bulls

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