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Buy Colgate Palmolive; target of Rs 1109: Reliance Securities

May 20
03:42 2017

Reliance Securities’ research report on Colgate Palmolive

Colgate-Palmolive has delivered a subdued performance in 4QFY17 with its revenues growing by 2.5% YoY to Rs10.3bn, while net profit remained largely flat at Rs 1.4bn. Its overall quarterly volume fell by 3% YoY due to weakness in wholesale trade post demonetisation. Growth in net profit was stagnant due to higher investment in brands through advertising spends.

Outlook

We believe that GST roll-out, continued strength of its flagship brand Colgate Dental Cream (CDC), increased traction in Cibaca Vedshakti and strong pricing power will drive growth for Colgate in coming years. Hence, we maintain our BUY recommendation on the stock with a Target Price of Rs 1,109, which implies an upside of 12% from current levels.

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