Colgate's 2QFY15 total income grew by 11.1% YoY to Rs 10 billion. Impacted by weak macros, volume growth continues to remain muted at 6% (toothpaste volumes grew 7% YoY). Furthermore, market share in the toothpaste category (though increased 80bps YoY) was a tad lower (by 30bps) as compared to 1QFY15.
''However, the company continued to gain share in the toothbrush category. EBITDA margin expanded by 240bps YoY to 18.6% led by lower COGS and A&P. Lower other income (-23.8% YoY) and higher depreciation (+52.1% YoY) and tax outgo (+164bps YoY) led to APAT growth of 18.3% YoY,'' said HDFC Securities.
''Despite P&G's initial failure in the toothpaste category, we expect the company to re-launch its toothpaste with much more fervor. Though we believe that P&G will take share from No. 2 player and Colgate will retain its market share, however, current valuations (Colgate trades at 30x FY17E EPS) do not offer significant risk-reward. Retain Sell with a TP of Rs 1,545 (27x FY17E),'' it added.
Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.