Q3FY21 Result Update - Colgate-Palmolive (India) - ICICI Direct

Colgate reported robust results with 7.8% consolidated revenue growth led by double digit domestic sales growth of 10.1%. We believe growth was largely driven by volumes given the company has significantly increased its marketing spends in brand building & promotions. Further, we believe new mouth spray also started contributing to revenues. CPIL launched Oil Pulling & toothpaste for diabetics during the quarter. The company also launched Naturals toothbrush portfolio with the launches of Super Flexi Salt and Zig Zag Turmeric. Given the sharp decline in commodity cost, gross margins expanded 400 bps. Further it has saved 244 bps in overhead spends through various cost cutting measures post pandemic. However, the company has significantly increased its advertisement spend (360 bps higher) during the quarter. Operating profit witnessed strong growth of 17.3% to Rs. 370.6 crore. Operating margins expanded 253 bps to 30.1%. Led by healthy growth in operating profit, lower interest cost & depreciation provisioning, net profit witnessed a robust growth of 24.7% to Rs. 248.4 crore.

Valuation & Outlook

The company has been able to maintain its market share in the last one year after the aggressive launches of natural brands under Vedshakti. Though the penetration led growth opportunities are limited in toothpaste, the company is well poised to take advantage of consumption shift towards Naturals & Ayurveda products. We maintain our BUY rating with a revised target price of Rs. 1820/share (earlier Rs. 1700).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Colgate_Q3FY21.pdf

Shares of COLGATE-PALMOLIVE (INDIA) LTD. was last trading in BSE at Rs.1604.25 as compared to the previous close of Rs. 1563.75. The total number of shares traded during the day was 119485 in over 6592 trades.

The stock hit an intraday high of Rs. 1669.2 and intraday low of 1568.8. The net turnover during the day was Rs. 194537691.

Source : Equity Bulls

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