COLGATE PALMOLIVE: P&G enters toothpaste category; gradual national launch ahead - Motilal Oswal

CLGT unlikely to be materially impacted; maintain Neutral

- P&G has entered toothpastes, with the launch of three variants under the Oral B brand.

- We do not expect this to create material disruption for CLGT, given its wide product portfolio, well entrenched brand equity and deeply penetrated distribution network.

- While we envisage continuation of media aggression from P&G, we believe it is unlikely to precipitate a price war in the category.

- We do not foresee material erosion in CLGT's market share. The entry of an MNC with deep pockets may expand the category, and being the market leader, CLGT could also benefit.

- We maintain our Neutral rating, given expensive valuations (31.4x FY14E and 26.7x FY15E earnings).

Source : Equity Bulls

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