Buy Colgate Palmolive Ltd For Target Rs.2,126 - Religare Broking Ltd
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With over 85 years of presence in India, Colgate- Palmolive India is the leader of the oral care segment and is also India’s most preferred oral care brand, reaching nine out of ten households. The product line of the company comprises a oral care range of toothpastes, toothbrushes, mouth washes, and personal care items such as hand washes and shower gels. The company’s products reach over 1.7mn stores, 95% of which are active every quarter. Further, it has established a state-of-the-art R&D center in Mumbai, which is one of its largest R&D facilities globally.
Withstanding leadership in Toothpaste: Colgate remains a market leader in the oral care hygiene with strong presence in both toothpaste and toothbrush categories. They are constantly focusing on driving growth from the core segment i.e. toothpaste led by innovations, premiumization and using science technology for products.
Opportunity and innovation to drive growth for Toothbrush: After toothpaste, Colgate has been one of the leaders in the toothbrush market as well and still there is huge scope of opportunity to grow in this space. Going ahead, they are committed to shift 100% of toothpaste portfolio to recyclable tubes by 2025 in India, improve portfolio efficiency, focus on innovation-led growth and at the same time maintain leadership position.
Shift towards building Palmolive Portfolio: Being a leader in oral care over years, now the company’s focus is on expanding and building personal care portfolio across segments such as skin, hair, body care, etc. Thus, the company has launched a range of products under Palmolive brands and further new launches in India would be supported by expertise of global parent and its strong recall value.
Financials & Valuation: We believe the company would continue to see steady growth ahead because of its leadership position across product portfolio, parent expertise and focusing on premiumization. We have estimated its Revenue/EBITDA/ PAT to grow at a 6.7%/10.3%/10.8% CAGR of FY23-25E and have initiated coverage with a Buy rating and a target price of Rs 2,126.
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