• Home
  • Opinion
  • Politics
  • World
  • Business
  • Science & Tech
Tuesday, January 31, 2023
No Result
View All Result
SUBSCRIBE
The Outlooker
27 °c
Delhi
  • Home
  • Opinion
  • Politics
  • World
  • Business
  • Science & Tech
  • Home
  • Opinion
  • Politics
  • World
  • Business
  • Science & Tech
No Result
View All Result
The Outlooker
No Result
View All Result
  • National
  • Politics
  • Opinion
  • Business
  • Science
  • World
  • Health
Home Business

Analyst Corner: Colgate downgraded to ‘neutral’ with TP of Rs 1,700

by The Outlooker Web Desk
May 19, 2021
in Business
0
Analyst Corner: Colgate downgraded to ‘neutral’ with TP of Rs 1,700
1.8k
SHARES
12.9k
VIEWS
Share on FacebookShare on Twitter

With weak topline and earnings growth likely to sustain going forward, the valuation at 37.6x FY23E EPS appears fair.

Colgate-Palmolive (CLGT)’s weak sales growth trend has persisted in recent quarters, including 4QFY21 — the two-year average sales growth stands at 5-6%. It has now been six years since the company reported over 7% sales growth for any year. With (a) the launch of its Non-Oral Care portfolio and (b) investments under the ‘Brush Twice a Day’ campaign seemingly on the backburner, it is unlikely to return to the double-digit sales growth seen over FY08–15 anytime soon.

Notably, certain factors that led to the positive margin surprise in 4QFY21 and the full-year FY21 — resulting in all-time high EBITDA margins — are not sustainable. These include (a) higher priced (and higher margin) SKUs gaining prominence in FY21 on account of customers showing a preference for larger packs, (b) slower sales in the low-margin toothbrush category — as the product is more discretionary than toothpaste, (c) lower-than-expected advertising spends in 4QFY21 and the full-year FY21, and (d) intensifying cost pressure due to crude-led RM inflation.

CLGT is likely to have posted domestic volume growth of 16% YoY in 4QFY21 (est. 17%).

Net sales grew 19.8% YoY to Rs 12.8b (in line with estimates) in 4QFY21. EBITDA was up 60.4% YoY to Rs 4.2b (est. Rs 3.9b). PBT grew 62.7% YoY to Rs 3.8b (est. Rs 3.4b). Adj. PAT grew 54.1% YoY to Rs 3.1b (est. Rs 2.6b). The two-year sales / EBITDA / adj. PAT CAGR came in at 5.5%/16.6%/25.4%.

Gross margins expanded 300bp YoY to 67.7% (in line with estimates).

FY21 sales/EBITDA/adj. PAT grew 7%/25.6%/26.8% to Rs 48.4b/ Rs 15.1b/ Rs 10.4b.

Valuation and view: The cornerstones of our earlier optimism on improved topline growth in CLGT were (a) new launches in Oral Care, (b) a potentially higher play in Naturals (38–39% of the category where CLGT was significantly under-indexed), (c) new launches in Non-Oral Care (~only 2% of sales currently v/s around half the sales for the parent) – leveraging on CLGT’s extensive distribution reach and implementation of the Brush Twice a Day campaign.

While there is no material change in our FY22E EPS, we reduce our FY23E EPS forecasts by ~6%, weighed by weak sales trends and lower margins. With weak topline and earnings growth likely to sustain going forward, the valuation at 37.6x FY23E EPS appears fair. We assign a value of 40x FY23E to arrive at our TP of Rs 1,700/share. Downgrade to Neutral.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

The Outlooker is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

The Outlooker Web Desk

The Outlooker Web Desk

Next Post
On Mosque Demolition In UP’s Barabanki, Muslim Law Board vs Officials

On Mosque Demolition In UP's Barabanki, Muslim Law Board vs Officials

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Seven Killed, Several Others Injured In Jeep-Trailer Truck Collision In Rajasthan
National

More Than 100 Students Fall Ill Due To Suspected Food Poisoning In Andhra Pradesh

January 30, 2023
Budding Maharashtra Wrestler Dies Of Heart Attack Hours After Bout
National

100 Students From Kerala School Hospitalised, Food Poisoning Suspected

January 30, 2023
Gujarat Court Convicts Asaram Of Raping Woman Who Stayed At His Ashram
National

Gujarat Court Convicts Asaram Of Raping Woman Who Stayed At His Ashram

January 30, 2023
Interview with Dr Terance Shipman
Entertainment

Interview with Dr Terance Shipman

January 30, 2023

Connect with us

No Result
View All Result

Archives

  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020

Category

  • Artistic
  • Business
  • Crypto
  • Design
  • Entertainment
  • Fashion
  • featured
  • Food
  • Gaming
  • Health
  • Human
  • Lifestyle
  • Movie
  • Music
  • National
  • Opinion
  • Politics
  • Science
  • Spaces
  • Sports
  • Tech
  • Travel
  • Uncategorized
  • World

Recent Posts

  • More Than 100 Students Fall Ill Due To Suspected Food Poisoning In Andhra Pradesh
  • 100 Students From Kerala School Hospitalised, Food Poisoning Suspected
  • Gujarat Court Convicts Asaram Of Raping Woman Who Stayed At His Ashram

About Us

The Outlooker

The Outlooker is your source of authentic, hand-picked news, stories, analysis from India & the World.

  • Terms Of Service
  • Privacy Policy
  • About us
  • Submit your story
  • Contact

© 2019-2021 The Outlooker. All rights reserved.

No Result
View All Result
  • Home
  • Politics
  • World
  • Business
  • Science
  • National
  • Entertainment
  • Gaming
  • Movie
  • Music
  • Sports
  • Fashion
  • Lifestyle
  • Travel
  • Tech
  • Health
  • Food

© 2019-2021 The Outlooker. All rights reserved.