IGI Logo

Steady outlook, valuations limit downside

CLGT Analyst meet gave a steady outlook led by

1) Continued strength in the premium segment (Colgate Total, Visible white purple and Periogard) with higher growth and superior margins

2) pick up in urban growth, faster than rural growth

3) Early double digit penetration in E comm which is margin (400bps higher than company’s average) & growth accretive

4) favorable trends like lower incidence of brushing twice/ daily brushing in rural and longer toothbrush replacement cycle. While we expect premium segments to sustain strong growth, Sensodyne's foray into whitening segment can increase segment competition.

CLGT continues to focus on

1) Lifting twice-a-day toothpaste usage penetration from current levels of 24%

2) Increasing once-a-day brushing penetration in rural India from current levels of 55%

3) higher growth in premium segment through superior products such as Colgate Total, Visible White Purple, and Periogard

4) Higher penetration in E comm/QC (~400bps margin accretive).

Significant headroom for oral-care penetration

Although toothpaste penetration has reached 100% in both urban and rural India, there exists scope for a steady growth in consumotion given that:

* Oral care reach is only 56% of the FMCG outlets in India and CLGT direct and indirect reach is 7.1mn outlets.

* MT and Ecom/QC share has increased from 16% to 20% over past 3 years (~14% modern trade and ~6% e-commerce), positive for major brands.

* Urban consumers not brushing twice a day has reduced from ~80% to ~76%, while rural people not daily brushing has improved from ~55% to ~45% which offers significant room for growth.

Please refer disclaimer at https://www.plindia.com/disclaimer/

SEBI Registration No. INH000000271