STOCK IN FOCUS
* Colgate-Palmolive ended 1.7% up in trade today at Rs1,118 compared to 0.6% increase in the benchmark Nifty.
* The company is the leader in the oral care market with volume share of 54% in toothpaste and 45.5% in the toothbrush segment with brands straddling across the pyramid.
* While the company has faced heightened competition from players like Patanjali, it has made concerted efforts to gain back share by aggresively entering the ayurvedic segment, focussing on premiumisation and improving its direct distribution network.
* We believe that GST roll-out, continued strength of its flagship brand Colgate Dental Cream (CDC), increased traction in the ayurvedic space and strong pricing power will drive growth for Colgate in coming years.
* The company is estimated to report revenues of Rs48.3bn and Rs7.4bn in FY19E. Based on EPS of Rs27.3, the stock currently trades at 41x FY19E earnings.
* We expect the Company to deliver 10.5% and 13.5% CAGR in revenue and earnings, respectively through FY17-19E and have a BUY recommendation on the stock with a Target Price of Rs1,235.
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