Please refer to important disclosures at the end of this report 1 Quarterly results ( ` cr) 1QFY14 1QFY13 % yoy 4QFY13 % qoq Revenue 845 736 14.7 812 4.1 EBITDA 150 142 5.5 149 1.0 OPM (%) 17.8 19.4 (157)bp 18.3 (54)bp Adjusted PAT 115 117 (2.4) 123 (7.0) Source: Company, Angel Research For 1QFY2014, Colgate Palmolive India (Colgate) posted a 2.4% yoy de-growth in its bottom-line to `115cr, due to a 157bp yoy contraction in OPM on account of steep yoy increase in advertisement and other expenditure. Key highlights: For 1QFY2014 Colgate’s results were below our expectations. The top-line rose by 14.7% yoy to `845cr, which was below our estimate. The company’s volume growth stood at 9%, aided by an 11% yoy growth in the toothpaste category. The company enhanced its leadership in the toothpaste category and achieved a volume market share of 55.9% for January – June 2013 (54.7% in January – June 2012). The OPM stood at 17.8%, down 157bp on a yoy basis, impacted by higher other expenses. The Net profit before exceptional items stood at `115cr and was below estimate. Outlook and valuation: We expect Colgate to report a 15.7% CAGR in its top-line and ~15.0.0% CAGR in its earnings over FY2013-15E. At the current market price, the stock is trading at 26.8x FY2015E EPS. We maintain our Neutral rating on the stock. Key financials Y/E March ( ` cr) FY2012 FY2013 FY2014E FY2015E Net sales 2,624 3,084 3,588 4,130 % chg 14.8 17.5 16.4 15.1 Net profit (Adj.) 446 497 560 658 % chg 10.9 11.3 12.7 17.4 EBITDA margin (%) 19.4 18.7 18.9 19.4 EPS ( ` ) 32.8 36.5 41.2 48.4 P/E (x) 39.5 35.5 31.5 26.8 P/BV (x) 40.5 36.0 28.0 21.7 RoE (%) 109.0 107.5 100.0 91.0 RoCE (%) 110.8 111.5 109.2 100.6 EV/Sales (x) 6.6 5.6 4.8 4.1 EV/EBITDA (x) 34.0 29.7 25.1 21.1 Source: Company, Ang el Research; Note: CMP as of August 8, 2013NEUTRAL CMP `1,297 Target Price -Investment Period - Stock Info Sector (438) Bloomberg Code CLGT@IN Shareholding Pattern (%) Promoters 51.0 MF / Banks / Indian Fls 5.2 FII / NRIs / OCBs 21.9 Indian Public / Others 21.9 Abs. (%) 3m 1yr 3yr Sensex 6.8 22.6 19.5 CLGT 16.3 22.0 102.3 Reuters Code CLGT.BO BSE Sensex 20,148 Nif ty 6,104 Avg. Daily Volume 18,581 Face Value ( `) 1 Beta 0.3 52 Week High / Low 1580/1098 Net Debt ( `cr) FMCG Market Cap ( `cr) 20,172 V Srinivasan 022 – 3935 7800 Ext: 6831 [email protected]Colgate Palmolive Performance Highlights1QFY2014 Result Update | FMCG August 10, 20 13
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For 1QFY2014 Colgate’s results were below expectations. Its top-line rose by
14.7% yoy to ` 845cr, which is below our estimates. The company’s volume growth
stood at 9%, aided by an 11% yoy growth in the tooth paste category. The
company enhanced its leadership in the toothpaste category and achieved a
volume market share of 55.9% for January – June 2013 (54.7% in January – June
2012).
The growth in market share was aided by healthy growth in flagship brands such
as Colgate Dental Cream, Active salt, MaxFresh and Colgate Sensitive. The
company’s volume market share in the tooth brush category too increased to
41.4% (38.7% in January to June 2012) during January-June 2013.
Colgate continues to focus on innovation to drive its growth. The company has
recently launched Colgate Visible White tooth paste. It is the first of its kind in oralcare product category in India that offers white teeth in just one week and is aimed
at creating and growing the whitening segment in the tooth paste category.
Colgate Visible White has whitening accelerators, high cleaning silica and
polyphosphates which remove and prevent tooth surface stains for visibly whiter
teeth.
Exhibit 3: Top-line growth at 14.7% yoy
Source: Company, Angel research
Exhibit 4: Volume market share (YTD) higher on yoy basis
Source: Company, Angel research
OPM down 157bp yoy
The company’s OPM stood at 17.8%, down 157bp on a yoy basis, impacted by
higher other expenses. The Net profit before exceptional items stood at ` 115cr and
was below our estimate. During the quarter, the company recorded exceptional
gains of ` 55cr with respect to slump sale of Global, a shared service organization
to Colgate Business services Pvt Ltd, which is a 100% subsidiary of its promoter
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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