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HIGHLIGHTS OF THE QUARTER:

* Colgate-Palmolive (India) Limited reported Net Sales growth of 2.7% over the same quarter of previous year aggregating to Rs. 1,196.8 cr for the quarter ended June 30, 2022.

* EBITDA for the quarter was Rs. 325.7 cr as against the EBITDA of Rs. 355.2 for the same quarter of the previous year.

* Net profit after tax for the quarter was Rs. 209.7 cr as against the Net Profit of Rs. 233.2 crore for the same quarter of the previous year.

* The current quarter was impacted by overall rural slowdown and inflationary pressures. The company’s overall pricing strategy and strong funding the growth programs delivered consistent margins while they continue to maintain their strong investment in innovation and brand building activities.

* Recent launch of Visible White O2 with patented innovative technology has been very well appreciated by the consumers. Also new category launches such as Palmolive Face care range and extensions in the oral care segment with Advanced Electric Toothbrushes and Water Flossers have recorded encouraging response. Moreover, relaunches of Colgate Strong Teeth and Colgate Vedshakti toothpaste have also been very well received, reinforcing the company’s commitment to bring to market superior products that enhance consumer experiences.

OUTLOOK AND VALUATION

We have forecasted annual sales growth of 8% in FY23E that calculates to a revenue of Rs. 5,506.4 cr for FY23E. We expect the PAT margins to be 21.9% in FY23E and EPS of Rs. 44.3. As we assign a P/E multiple of ~40X we arrive at a price target of Rs. 1,793 which gives us an upside of ~16% over an investment horizon of 8-10 months from CMP.

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