Colgate Palmolive - Ahead of The Pack; Visit Note :: Edelweiss

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Consolidating market share… • Colgate Palmolive’s Q3FY15 results update :: ICICI Securities, report

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Colgate Palmolive - Rules The Roost; Result Update Q3FY15 :: Edelweiss

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Inline nos, volume growth disappoints- Colgate :: HDFC Securities

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Volume recovers, margin expands… • Colgate Palmolive :: ICICI Securities, pdf link

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

NOMURA - Colgate

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Colgate Palmolive (2QFY15) : Inline nos. Maintain SELL :: HDFC Securities, PDF link

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

Colgate-Palmolive (India) - Q3FY14 Results Update - Margins under pressure :: Centrum

Rating: Hold; Target Price: Rs1,250; CMP: Rs1,310; Downside: 5%



Margins under pressure



We maintain Hold rating on Colgate and believe A&P spends could
increase as competitive intensity in the oral care category continues
to remains high impacting margins as seen in Q3FY14 results.
Advertising and other expenses grew by 21.6% YoY and 32% YoY
respectively lowering operating margins by 67bps despite gross margin
expansion of 80bps. However, the company was able to increase its
market share in competitive category with 11% volume growth in the
toothpaste category. We expect the overhang and uncertainty to
continue for the next couple of quarters and impact valuations as seen
in the past 6 months where the stock under-performed the FMCG index
and corrected by 12%

$ Robust revenues, but margins under pressure: Colgate posted robust
15.9% sales growth on the back of strong 10% YoY overall volume growth
and 11% volume growth in the toothpaste category on low base. Revenue
was at Rs8840mn, 1.3% below expectations. Operating profit was at
Rs1434mn up by 11.3%YoY (1.8% below expectations) as operating margin
contracted by 67bps due to higher advertising and other expenditure.
Adj. PAT was at Rs1129mn, (up 1.7% YoY) 3.2% below expectations as
adj. tax rate for the company was high at 27%

$ Double digit volume growth in toothpaste category: The company
posted 10% overall volume growth led by the toothpaste category which
grew by 11%. Even after regular price hikes and stiff competition, the
company has been able to achieve double digit volume growth in the
toothpaste category. Flagship brands such as ‘Colgate Dental Cream’,
‘Active Salt’, ‘Max Fresh’, and ‘Colgate Total’ along with recently
launched ‘Visible White’ contributed to this growth. Volume market
share in the toothpaste category continues to increase and was at 56%
in Jan-Dec ’13 against 54.5% in Jan-Dec ’12 on the back of
premiumisation of products. Market share in the toothbrush category
also increased to 41.5% against 39.8% as the company has been
aggressive with multiple launches

$ High A&P spends impact margins: Despite gross margin increase of
80bps to 60.9% during the quarter, operating margins declined by 67bps
to 16.2%. Advertising spends for the company increased 21.6% YoY while
admin and other expenses which includes promotion expenses increased
by 32% YoY following high competitive intensity in the oral care
category. We expect high intensity to remain for a few quarters with
Colgate maintaining its share of voice to defend its market share

$ Maintain Hold: We have lowered our earnings estimate by 1.1%/1.2%
for FY14/FY15 on the back of lower volume growth and high A&P spends.
Colgate is currently trading at 34.9x and 29.5x FY14E and FY15E
respectively and we maintain Hold rating on the stock with a revised
target price of Rs1250 (25x Dec 2015). The stock has underperformed
the FMCG index and corrected ~12% in the last 6 months on the back of
concerns of increased competition and high A&P spends. Key downside
risk could be further increase in A&P spends and loss of market share
impacting volume growth while upside risk could be lower competitive
intensity improving margins.





Thanks & Regards

COLGATE PALMOLIVE Fore warned is fore armed : Edelweiss,

We recently met Ms. Prabha Parameswaran, Managing Director, Colgate‐
Palmolive India (Colgate). She reiterated that there is no slowdown in
growth, except for some impact in the mouthwash segment.
Management expects sales growth momentum (16% CAGR over FY08‐13)
to remain robust riding rise in both penetration (rural stands at only 63%
against 91% in urban) and per capita consumption (India half of China;
pushing “brushing twice”). We believe the company is well equipped to
counter competition from P&G’s impending entry in the toothpaste
market. However, we expect ad spends in the toothpaste category to
accelerate (will aid broadcasters like ZEE, Sun TV). Maintain ‘HOLD’.

Colgate-Q4FY13 earnings disappoint; P&G entry to watch out for :: JPMorgan

Colgate’s 4Q performance was a mixed bag, with sales growth coming in ~2%
ahead of our expectations, but earnings were significantly below estimates owing
to weak margin performance. Colgate reported Sales, EBITDA and PAT growth
of 18%, -1%, and -6% y/y. We revise our FY14/15 earnings estimates downwards
by ~4-5%. Competitive activity has stepped up in the toothpaste category (by
GSK and HUL) and this will intensify further with P&G’s potential entry soon,
posing downside risk to Colgate’s margins. We think current valuations at 35x
FY14E and 30x FY15E P/E are expensive and we maintain our UW stance on the
stock.

Surge in volume growth Colgate :Centrum

Surge in volume growth
Colgate posted Q4FY13 revenues above expectations with 18.3%YoY (2.4% above expectations) growth on the back of 11%YoY volume growth in the toothpaste category and 12% (8% in Q3FY13) overall, coupled with market share gain across categories. Operating profit was down by 2.7% YoY (15.2% below expectations) on the back of higher admin and A&P spends. Adj PAT was down by 5.8% YoY to Rs1232mn. We maintain Neutral rating on the back of steep valuations and increasing competitive intensity which will mute margin expansion.

Robust revenues but margins under pressure: Colgate posted 18.3% revenue growth to Rs8116mn on the back of 12%YoY overall volume growth and 11% (v/s 10% expectation) in the toothpaste category. Operating profit was at Rs1487mn down by 2.7%YoY as operating margin contracted by 397bps. PAT was at Rs1232mn (down 5.8% YoY) 15.7% below expectations.

Volume growth returns: Volume growth in the toothpaste category was 11%YoY against 8% in the last quarter as market share increased by 130bps to 55.4% from 54.1% last year. Toothbrush market share also improved from 37.7% to 41.5% during the quarter, while mouthwash market share was at 26.5%, up 30bps YoY.

Increasing focus on premiumisation: 2.5-3% of the growth was on account of premiumisation and change in product mix during the quarter. The company is slowly upgrading its premium product offerings to customers as Sensitive toothpaste market will now have a 5% market share. Products such as Colgate Visible White, Colgate Total Pro Gum Health, Colgate Sensitive Pro-Relief Multi-Protection, Colgate Max Fresh Ice and Colgate Total Advance were some of the launches during the year. The company has also been aggressive in the toothbrush space with multiple new launches.

Colgate Palmolive - Q3FY13 Result Update - Centrum

Q3FY13 Result Update

Colgate-Palmolive (India)

Neutral

Target Price: Rs1,407

CMP: Rs1,362

Upside: 3%

Margins disappoint

Colgate-Palmolive posted 13.9% revenue growth in Q3FY13 on the back of 9% volume growth. Operating margins were under pressure with 238bps decline on the back of high employee cost and other expenditure. Higher tax rate muted PAT with a drop of 3.9% YoY. Premium valuations offer limited upside and hence we maintain Neutral view on the stock.  

m  Disappointing Q3FY13 results: Colgate posted 13.9% sales growth on the back of mere 9% YoY volume growth with revenue at Rs7626mn (up 13.9% YoY but down 1.4% QoQ). With margin compression due to lower volume growth, coupled with high other expenses, operating profit was at Rs1288mn (down 0.2% YoY and 18% QoQ). PAT was down by 3.9% YoY to Rs1111mn on the back of higher tax rate.

m  Volume growth low, but market share gain continues: The company posted mere 9% volume growth led by the toothpaste category which had 10% volume growth. On the back of regular price hikes volume growth came under pressure. Market share in the toothpaste category continues to increase and was at 54.2%, up from 52.4% last year. Premiumisation of products coupled with new launches is helping the company gain market share in the toothpaste category.  In the mouth wash category the recent launch has helped the company enhance sales and market share was at 26.7%. The market share in the toothbrush category was at 39.5% on the back of focussed efforts and new launches.

m  Operating margin dips: Operating margin of the company contracted by 238bps YoY and 341bps on a sequential basis to 16.9%. Gross margins dipped by mere 31bps on the back of prudent price hikes on a regular basis. Advertising spends were under check on the back of lower competition and was at 13% of sales. Employee cost was up by 18.2% YoY while other expenditure was up by 45% YoY on the back of the new plant.

m  Estimates lowered; Maintain Neutral: We have lowered our FY13/FY14 estimates by 4.1%/3.5% factoring in lower volume growth and high operating cost, both impacting margins. The stock is currently trading at 35.7x FY13E and 30.9x FY14E which is ~15% above its historical average. However at such premium valuations we believe the stock is fairly valued. Hence we maintain Neutral rating with a target price of Rs1,407 (30x Sept 2014E).

-- 

Technicals- LIC Housing, Cairn, Andhra bank, Colgate, reliance infrastructure, SML ISUZU, Raj TV ::Business Line

Colgate-Palmolive India: Book profits :: Business Line

Colgate Palmolive - Volume spurt lends momentum; visit note; Hold ::Edelweiss, PDF link

Colgate Palmolive (CLGT IN, INR 1,217, Hold)

We recently met Ms. Prabha Parameswaran, Managing Director, Colgate-Palmolive (Colgate). The interaction infuses us with confidence about the company’s robust volume growth (in double digits for past many quarters), which is likely to remain strong over the coming quarters riding rise in both penetration and per capita consumption. New categories like sensitive toothpaste and mouthwash will further enhance growth and premiumisation. We expect Colgate to be one of the biggest beneficiaries of softness in P&G’s stance (toothpaste entry delayed). But we would watch out for HUL’s new product Pepsodent Expert Protection. Maintain ‘HOLD’ as fairly valued over the near term.

Strong volume growth continues Colgate-Palmolive : Centrum Research

Strong volume growth continues
Colgate-Palmolive posted strong 20.5% revenue growth in Q1FY13 on the
back of 11% volume growth. Gross margins continued to be healthy at 59%
while increasing competitive intensity boosted advertising spending by 32%
YoY. High tax rate muted PAT growth to 17% YoY. We believe premium
valuations are not sustainable and hence maintain Neutral view on the stock.
Robust growth: Colgate posted robust 20% sales growth on the back of
strong 11% YoY volume growth with revenue at Rs7361mn (up 20.5% YoY
and 7.3% QoQ). With margin expansion on the back of price hikes, operating
profit was at Rs1424mn (up 21.5% YoY but down 7% QoQ). PAT was up by
17% to Rs1174mn.
Market share improves: For the 17th consecutive quarter the company posted
double digit volume growth of 11% led by the toothpaste category. Even after
regular price hikes volume growth continued. Market share in toothpaste was the
highest in the past few years at 54%. Premiumisation of products is helping the
company gain market share in the toothpaste category. In mouth wash category the
recent launch of the Colgate Plax Fresh Tea continued to enhance sales. Market share
in the toothbrush category was at 38.2% against 36.3% last year.

Colgate result Views by Motilal Oswal

 Colgate result by Taher Badshah,Sr Fund Manager & Co-head equities, Motilal Oswal AMC-PMS

  

Colgate

Results has been inline with our expectation with 11% volume growth and gaining dominance in terms of market share at 54.5%, colgate has seen improvement in market share in tooth brush and mouthwash as well. Despite infaltionary pressures, margins have remained intact at 21.5%. We expect colgate to deliver strong results with higher market share going forward.

Colgate-Palmolive (India) Sell Target Price: Rs1,023 :Centrum

Colgate-Palmolive (India)

Sell

Target Price: Rs1,023

CMP: Rs1,139         

Downside: 10%

Strong volume growth continues

Colgate-Palmolive posted strong 18% revenue growth in Q4FY12 on the back of 13% volume growth in its core toothpaste category. Higher gross margins led to margin expansion and strong 15% PAT growth. We believe premium valuations are not sustainable and hence maintain SELL on the stock.  

-- 

Colgate India:: Risk to growth; reinstate at Underperform 􀂄BofA Merrill Lynch

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Colgate India
Risk to growth; reinstate at
Underperform
􀂄 Reinstate coverage at Underperform with a PO of Rs905
We reinstate Colgate India, a 51% subsidiary of Colgate-Palmolive Co., USA, at
U/P led by rich valuation and risk to earnings. Colgate leads the Indian oral care
market with 47% share. PO of Rs905 is validated by DCF and implies a target 22x
one-year fwd PE. At PO Colgate will trade at 20% discount to target multiple for
Hindustan Unilever - justified given Colgate’s low diversification and less growth.
Leader in oral care; expect about 16% revenue growth…
Oral care is a Rs47bn opportunity in India with an estimated CAGR of over 10% in
the medium term. Colgate leads in this category and has seen market share rise
by 700bp since 2006 to 47% currently led by i) strong brand/product portfolio, ii)
consistent A&P support and iii) robust distribution. This should drive a 16%
revenue CAGR over FY11-13 led by ~10% estimated volume growth.
…but margins can be pressured; downside risk to earnings
However, oral care is likely to see higher competition as HUL, P&G etc eye
market share gains. This can pressure margins in the medium term. While we
bake in 45bp margin decline over FY11-13 led by this, see another 100bp down
side risk in case of a severe competition that can lead to i) higher A&P and ii) less
room to increase prices in budget conscious/ monsoon dependent rural markets.
Any correction in RM cost is likely to be passed on to the consumer.
Expensive valuations, multiple can de-rate
Post a 41% outperformance in CY11 given defensive nature, Colgate trades at
27x 1-year forward PE - about 20% premium vs 5-year historical average. These
are expensive valuations given i) possibility of lower growth vs historic and ii)
higher risk to margins. Expect multiple to de-rate to a historical avg of 22x. Key
risks: i) stronger-than-expected rural growth and ii) lower competitive intensity.

Colgate-Palmolive (India): Strong volume growth continues ::Centrum

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Strong volume growth continues
Colgate-Palmolive posted strong 20% revenue growth in Q3FY12 on the back
of 15% volume growth in its core toothpaste category. Lower than expected
A&P and other expenditure led to margin expansion and strong 74% PAT
growth. We believe premium valuations are not sustainable and hence
maintain SELL on the stock.
􀂁 Robust growth: Colgate posted robust 20% sales growth on the back of
strong 15% YoY volume growth in the toothpaste category with revenue at
Rs6898mn (up 19.6% YoY and 2% QoQ). With significant margin expansion on
the back of lower A&P spend coupled with low admin & other expenditure,
PAT was higher than expected at Rs1156mn (up 74% YoY; up 16% QoQ).
􀂁 Strong growth across categories: For the 15th consecutive quarter the
company posted a double digit volume growth led by the toothpaste
category. Even tough the company hiked prices by 3-5% early in FY12, volume
growth has only got stronger. Market share in toothpaste dipped marginally
by 10bps to 52.5%. Market share in higher price point products such as
mouthwash grew to 27.4%. In the toothbrush category the company launched
a few new products for adults and kids.