Buy Colgate Palmolive (India) Ltd For Target Rs. 2,850 by Motilal Oswal Financial Services Ltd
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* Demand was subdued for oral care. We expect 6% revenue decline, led by 5% volume decline in toothpaste in 2Q.
* Moreover, channel destocking due to revised GST rates (from 18% to 5%) impacted 2Q performance.
* GP margin is expected to contract 60bp YoY to 67.9%, while EBITDA margin is expected to contract 90bp YoY to 29.8%, given higher ad spends and operating activities.
* The company is focused on expanding distribution reach and improving product penetration in the rural market through LUPs.
* Promotions in the GT channel and the quantum of discounting in alternate channels will be the key monitorables.
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SEBI Registration number is INH000000412
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