COLGATE PALMOLIVE (INDIA) LTD

Transcription

1 Stock Coverage COLGATE PALMOLIVE (INDIA) LTD BUY CMP TARGET 145. LONG TERM INVESTMENT Date 12 th Dec 218 BSE Code 583 NSE Code COLPAL Market Cap (Rs Cr) week High/Low 1285/12.1 Industry Face Value Shares O/S (In No) Household & Personal Products Rs 1/Share 27.2 Cr EPS * 27.4 Book Value* P/E P/B *Note: On Standalone TTM basis Others 36% Shareholding Pattern as on Sept 218 Promoter 51% Colgate-Palmolive (India) Limited is India s leading provider of scientifically proven oral care products with multiple benefits at various price points. The range includes toothpastes, toothpowder, toothbrushes and mouthwashes under the Colgate brand, as well as a specialized range of dental therapies under the banner of Colgate Oral Pharmaceuticals. The Company also provides a range of personal care products under the Palmolive brand name. Strong performance by key brands: In the Naturals portfolio Colgate Swarna Vedshakti toothpaste continues to perform extremely well. Company recently launched the toothpaste in multiple pack sizes at different price points, nationally, where it continues to show a positive consumer confidence with strong repeat purchases. Also, company has relaunched India s largest selling toothpaste and Colgate s flagship brand - Colgate Strong Teeth, on an evocative platform of 'Daant Banaye Andar se Strong (Strengthens Teeth from within). The all new brand proposition unveiled through a nationwide 36 campaign across all consumer touch points. Leadership position in toothpaste category: The Company continues its leadership positions in the Toothpaste category with a volume market share of 52.5% (Apr-Sep 18) and in the Toothbrush category with a volume market share of 44.2% (Apr-Sept 18).Understanding the shift of preferences that consumers are exhibiting towards e-commerce, company continue to invest ahead of the growth curve with the objective of being market leaders online as well in addition to traditional stores. Healthy financial performance: In Q2FY19. company has posted net sales of Rs. 1,16.6 crore for the second quarter of the financial year , an increase of 8% over the same quarter of the previous year. Company has posted reported net profit after tax for the quarter at Rs crore, an increase of 11% over the previous year quarter.in H , company has posted net sales at Rs. 2,194.2 crore an increase of 7% (excluding GST impact) over the same period of the prior year. During same period reported net profit was at Rs crore, an increase of 23% over the prior period. Excluding the impact of exceptional items, the net profit increased by 14% over the same period. Valuation FII 13% Research Analyst : Astha Jain For Private Circulation Only The company is currently trading at of TTM eps of Rs 27.4 while it is trading at 44.51x of FY19E eps & 39.3x of FY2E eps. Going with the facts like increasing MSPs and normal monsoon, election year, freebies, loan waivers, we expect strong demand for products of company will emerge from rural areas. Along with it robust financial performance & strong future outlook is making a case for buy on the stock.hence,we are positive on stock & recommending Buy with price target of Rs 145 for long term horizon.

2 From a modest start in 1937, Colgate-Palmolive (India) today has one of the widest distribution networks in India - a logistical marvel that makes Colgate available in almost million retail outlets across the country. The Company has grown to a Rs. 449 crore plus organization. The company leads the 76 crore Indian toothpaste market by holding 53.4% of the value market share in Products Oral care-under this segment the company offers product like toothpastes, toothbrush, tooth powder & tooth whitening products. Personal care -In this segment it offer products skin care, hair care,body wash,& shaving creams Naturals Portfolio of colgate includes Colgate Swarna Vedshakti, Colgate Cibaca Vedshakti, Colgate Active Salt, Colgate Active Salt Lemon, Colgate Active Salt Neem. Colgate has emerged as the #1 Most Trusted Brand in India across categories inthe Economic Times Brand Equity Most Trusted Brand Survey for the year 217. This is the 7th consecutive year that Colgate has been voted as the #1 Most Trusted Brand. Colgate is the only brand to feature in the top three ranks from since inception of the survey. Colgate, in partnership with IDA, Sri Ramachandra University (SRU) and Rotary International District 3232, made a proud entry in the Asia Book of Records, for Most People Brushing their Teeth together. Aimed at educating people about oral hygiene and the right techniques for brushing, the event witnessed a total 23,615 people including school children and adults brushing their teeth in the right manner, at the same time and at the same venue (SRU grounds, Chennai), using Colgate Toothpaste and Colgate Toothbrushes. 66 Gross Margin % 8 PAT & Margin % PAT MARGIN % FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY9 FY1 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18. For Private Circulation Only \

3 Strong growth strategy Company has plans to drive its sales and volume up, through increase in its margins, bringing down cost, continuing to invest behind advertising,.these factors will in turn drive operating profits of company. Company s key growth drivers are innovation, engaging with consumers to build brands, winning on ground & strong professional partnerships. For many years, company have been engaging consumers with the Colgate Scholarship Offer on the packs of company s flagship offering, Colgate Strong Teeth toothpaste. In last FY, company have strengthened this engagement by partnering with BYJU s, the popular learning app. In addition to receiving a chance to win an education scholarship, consumers received a coupon code for a free one month subscription to BYJU s course materials. During the same year, company also launched an innovative initiative to celebrate the legacy of tamil poet- Thiruvalluvar.Company introduced special-edition Colgate Active Salth toothpaste packs with Thirukkural inspired stories printed inside the carton. Company expanded its toothbrush business by increasing its multipack going from three packs to six packs. The brush multipacks have done very well in the modern trade be it from internal shipment as well as market share. This is mainly due to drive engagement as well as making it much better than prior year on those special promotions. Company continue to drive its distribution number of brands in rural, it is 3X versus 212 to 147 and company have special plans this year to increase its direct coverage. The plans are in place to increase its direct coverage between 2% to 25%. It is expected that by Q3FY19, company would start to see some improvement to its infrastructure, and, it really emphasizes on strengthening the current coverage and adding to it by 2% to 25%. Toothpaste Volume Share Toothbrush Volume Share Colgate Colgate 3.2 X Colgate Competitor 1 Competitor 2 Competitor Colgate Competitor 1 Competitor 2

4 New Launch Company is focused on delivering insightdriven innovation that provides value-added new products across all price points. In F.Y , this innovation has led to the launch of the following products: Toothpaste category: Colgate Swarna Vedshakti: This premium toothpaste in the Naturals category was launched in select markets and is now being rolled out more broadly across the country. Colgate Swarna Vedshakti blends the goodness of Indian natural ingredients of Aloe Vera, Clove, Honey, Tulsi, Neem and Amla with Colgate s oral care expertise, and effectively delivers holistic oral care. Colgate MaxFresh with Cooling Crystals - New Xtra Fresh: In the freshness segment, company has re-launched Colgate MaxFresh with Cooling Crystals with a new formula powered with breakthrough cooling technology that provides more intense cooling and a super fresh experience. Toothbrush category: Colgate Neo: An aesthetically designed toothbrush, Colgate Neo is available in 6 exciting and differentiating handle bristle colour combinations. Its ultra soft bristles gently cleans teeth. With 3,626 high density bristles, Colgate Neo comes in premium packaging which stands out from other toothbrushes. 15 VOLUME GROWTH ( %) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18` Q4'18 Q1'19 Q2' EBIDTA Margin (%) Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19

5 P&L A/c Rs Cr Particulars FY16 FY17 FY18 FY19E FY2E Net Sales Growth ( %) Expenditure EBIDTA Growth (%) EBIDTA Margin (%) Other Income Depreciation EBIT EBIT Margin (%) Interest..... Exceptional Item (31.34). (11.65).. PBT Tax PAT Growth (%) --- (.64) NPM (%) Ratios Particulars FY16 FY17 FY18 FY19E FY2E EPS ROCE(%) ROE(%) Book Value Debt/Equity.....

6 Balance Sheet Rs Cr Particulars FY16 FY17 FY18 FY19E FY2E Sh Capital Res & Surplus Sh App/Warrants Minority Interest..... Total Debt(Long..... Term+Short Term Borrowings) Other Long Term Liab & Provision Net Deferred Tax Liability Sources Of Fund Net Fixed Assets Non Current Investments Intangible Assets..... Other Non Current Assets Total Current Assets Current Liabilities & Provisions Net Current Assets (167.55) (126.93) Uses Of Funds

7 Standalone Quarterly Financial Highlights Rs Cr Particulars Q2FY19 Q2FY18 Q1FY19 YoY% QoQ% Total Income Total Expenses Operating Profit Net Profit PBIDTM % NPM % (7.64) EPS Past Price Movement 13 SENSEX (34,584.13, 35,27.33, 34,426.29, 35,15.1, ), COLGATE PALMOLIV (1,21.85, 1,275.4, 1,193.5, 1,241., +39.)

8 HEM SECURITIES LIMITED MEMBER-BSE,CDSL,SEBI REGISTERED CATEGORY I MERCHANT BANKER Sebi Registration No For Research Analyst: INH1225 MUMBAI OFFICE: 94, A WING. 9 TH FLOOR, NAMAN MIDTOWN, SENAPATI BAPAT MARG, ELPHINSTONE ROAD, LOWER PAREL,MUMBAI -413 PHONE FAX JAIPUR OFFICE: 23-24, JAIPUR TOWERS, M I ROAD, JAIPUR-321 PHONE FAX GROUP COMPANIES HEM FINLEASE PRIVATE LIMITED MEMBER-NSE HEM MULTI COMMODITIES PRIVATE LIMITED MEMBER-NCDEX, MCX HEM FINANCIAL SERVICES LIMITED NBFC REGISTERED WITH RBI Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advice. Reader is requested to rely on his own decision and may take independent professional advice before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned herein and the same have acted upon or used the information prior to, or immediately following the publication. Disclosure of Interest Statement 1. Analyst Ownership of the stock No 2. Hem & its group companies ownership of stock Yes 3. Hem & its group companies director ownership of stock No 4. Broking relationship with the company covered No Analyst Certification The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.