Hold Colgate Palmolive (India) Ltd For Target Rs.1,793 - Sushil Finance
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Colgate Palmolive (India) Ltd. has reported numbers for the quarter ended Mar’22. Following are the highlights of the result.
Highlights from the Earnings Conference Call:
* The company increased its brand awareness by 700 Bps vs 2019 to 71%, additionally the company has become India’s most penetrated brand at 88% ‘House Hold’ (HH) market penetration;
* In FY22, the company reported sales to the tune of Rs. 5,100 cr with EBITDA %, PAT % and EPS at 30.7%, 21.1% and Rs. 39.70 respectively;
*The company has appointed Shahid Kapoor and Rana Dagupatti as brand ambassadors to increase brand awareness in different part of the country;
* Increased market share of Flexi toothbrush by 1.7X in FY22;
* Launched new products in the category of ‘Colgate Active Salt’ like ‘Colgate Active Salt Neem’ and ‘Colgate Active Salt lemon’;
* Further new product are launched under the brand ‘COLGATE’ with Gum Expert’ & ‘Diabetics’;
* Colgate Palmolive (India) Ltd has shown a consistent 5 year CAGR of ~5% over the last couple of years due to increased brand awareness, market penetration and new product launches. However in FY22, the oral care segment in the country has not performed due to adverse macro factors prevalent in India which has resulted in the lower growth rate for the company in India compared to the global parent entity. The management believes that the market penetration and the brand recall will enable the company to grow at a reasonable pace in line with the expected market growth rate prevalent in emerging markets.
OUTLOOK AND VALUATION
We have forecasted annual sales growth of 8% in FY23E derived 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 ~11% over an investment horizon of 10-12 months from CMP of Rs. 1,615.
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