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Colgate Palmolive 3QFY2014 performance highlights and results update

January 24, 2014, Friday, 04:40 GMT | 23:40 EST | 09:10 IST | 11:40 SGT
Contributed by Angel Broking


For 3QFY2014, Colgate Palmolive India (Colgate)’s results were in line with our expectations. The company posted a modest 1.7% yoy growth in its bottom-line to Rs.113cr, impacted by lower OPM.
 
Key highlights: The company’s top-line rose by 15.9% yoy to Rs.884cr, aided by both volume and value growth. The volume growth for the quarter stood at 10%, aided by an 11% yoy growth in the toothpaste category. Growth was driven by the company’s flagship brands Colgate Dental Cream, Active Salt, Max Fresh and Colgate Total. The recently launched Visible White contributed to the growth as well. The company enhanced its leadership in the toothpaste category and achieved a volume market share of 56.0% for the year 2013 (up from 54.5% in 2012) despite the intense competition in the category. Its OPM stood at 16.2% down 67bp on a yoy basis, impacted by higher advertising expenses (up 64bp yoy as a % of sales) and higher other expenses (up 311bp yoy as a % of sales) incurred to meet competition.
 
Outlook and valuation: We expect Colgate to report a 16.2% CAGR in its top-line and ~9.0% CAGR in its earnings over FY2013-15E. At the current market price, the stock is trading at 30.4x FY2015E EPS. We maintain our Neutral rating on the stock.