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7/27/2019 Colgate Palmolive, 1Q FY 2014
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Please refer to important disclosures at the end of this report 1
Quarterly results
(` cr) 1QFY14 1QFY13 % yoy 4QFY13 % qoq
Revenue 845 736 14.7 812 4.1
EBITDA 150 142 5.5 149 1.0
OPM (%) 17.8 19.4 (157)bp 18.3 (54)bp
Adjusted PAT 115 117 (2.4) 123 (7.0)
Source: Company, Angel Research
For 1QFY2014, Colgate Palmolive India (Colgate) posted a 2.4% yoy de-growth
in its bottom-line to ` 115cr, due to a 157bp yoy contraction in OPM on account
of steep yoy increase in advertisement and other expenditure.
Key highlights: For 1QFY2014 Colgate’s results were below our expectations.
The top-line rose by 14.7% yoy to ` 845cr, which was below our estimate. The
company’s volume growth stood at 9%, aided by an 11% yoy growth in the
toothpaste category. The company enhanced its leadership in the toothpaste
category and achieved a volume market share of 55.9% for January – June
2013 (54.7% in January – June 2012). The OPM stood at 17.8%, down 157bp
on a yoy basis, impacted by higher other expenses. The Net profit before
exceptional items stood at ` 115cr and was below estimate.
Outlook and valuation: We expect Colgate to report a 15.7% CAGR in its
top-line and ~15.0.0% CAGR in its earnings over FY2013-15E. At the
current market price, the stock is trading at 26.8x FY2015E EPS. We maintain
our Neutral rating on the stock.
Key financials
Y/E March (` cr) FY2012 FY2013 FY2014E FY2015E
Net sales 2,624 3,084 3,588 4,130
% chg 14.8 17.5 16.4 15.1
Net profit (Adj.) 446 497 560 658
% chg 10.9 11.3 12.7 17.4
EBITDA margin (%) 19.4 18.7 18.9 19.4
EPS (`) 32.8 36.5 41.2 48.4
P/E (x) 39.5 35.5 31.5 26.8
P/BV (x) 40.5 36.0 28.0 21.7
RoE (%) 109.0 107.5 100.0 91.0
RoCE (%) 110.8 111.5 109.2 100.6
EV/Sales (x) 6.6 5.6 4.8 4.1
EV/EBITDA (x) 34.0 29.7 25.1 21.1
Source: Company, Angel Research; Note: CMP as of August 8, 2013
NEUTRALCMP ` 1,297
Target Price -
Investment Period -
Stock Info
Sector
(438)
Bloomberg Code CLGT@IN
Shareholding Pattern (%)
Promoters 51.0
MF / Banks / Indian Fls 5.2
FII / NRIs / OCBs 21.9
Indian Public / Others 21.9
Abs. (%) 3m 1yr 3yr
Sensex 6.8 22.6 19.5
CLGT 16.3 22.0 102.3
Reuters Code CLGT.BO
BSE Sensex 20,148
Nifty 6,104
Avg. Daily Volume 18,581
Face Value ( ` ) 1
Beta 0.3
52 Week High / Low 1580/1098
Net Debt ( ` cr)
FMCG
Market Cap ( ` cr) 20,172
V Srinivasan
022 – 3935 7800 Ext: 6831
Colgate Palmolive
Performance Highlights
1QFY2014 Result Update | FMCG
August 10, 2013
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Colgate | 1QFY2014 Result Update
August 10, 2013 2
Exhibit 1: Quarterly performance
Y/E March (` cr) 1QFY14 1QFY13 % yoy 4QFY13 % qoq FY2013 FY2012 % chg
Net Sales 845 736 14.7 812 4.1 3,084 2,624 17.5
Consumption of RM 328 300 9.5 322 1.9 1,250 1,050 19.0(% of Sales) 38.9 40.7 39.7 (2.1) 40.5 40.0
Staff Costs 62 62 (0.7) 70 (10.9) 249 216 15.7
(% of Sales) 7.3 8.5 8.6 (14.4) 8.1 8.2
Advertising 101 84 21.1 82 23.5 355 263 34.8
(% of Sales) 12.0 11.4 10.1 18.7 11.5 10.0
Other Expenses 203 148 37.2 189 7.3 653 586 11.4
(% of Sales) 24.0 20.1 23.3 3.1 21.2 22.3
Total Expenditure 694 594 17.0 663 4.8 2,507 2,115 18.6
Operating Profit 150 142 5.5 149 1.0 577 509 13.3
OPM 17.8 19.4 18.3 18.7 19.4
Interest 0 0 0 0 2
Depreciation 12 11 11.7 11 4.2 44 39 11.2
Other Income 32 31 3.1 32 0.5 130 120 8.0
Recurring PBT 171 163 4.6 169 0.7 663 588 12.7
Extr. Income/(Expense) 71 0 0 0 0
PBT (incl. Extr. Items) 241 163 47.9 169 42.4 663 588 12.7
(% of Sales) 28.6 22.2 20.9 21.5 22.4
Provision for Taxation 56 46 22.6 46 166 142 17.2
(% of PBT) 23.2 28.0 27.3 (14.9) 25.1 24.1
Reported PAT 185 117 57.7 123 50.3 497 446 11.3
PATM 22 16 15 16 17
Equity shares (cr) 14 14 14 14 14
EPS (`) 8.4 8.6 (2.4) 9.1 (7.0) 36.5 32.8 11.3
Adjusted PAT 115 117 (2.4) 123 (7.0) 497 446 11.3
Source: Company, Angel Research
Exhibit 2: 1QFY2014 Actual vs Angel estimates
(` cr) Actual Angel Est. % Diff.
Revenue 845 868 (2.7)
EBITDA 150 169 (11.3)
OPM (%) 17.8 19.5 (172)PAT 115 137 (16.1)
Source: Company, Angel Research
7/27/2019 Colgate Palmolive, 1Q FY 2014
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Colgate | 1QFY2014 Result Update
August 10, 2013 3
Top-line growth at 14.7% yoy
For 1QFY2014 Colgate’s results were below expectations. Its top-line rose by
14.7% yoy to ` 845cr, which is below our estimates. The company’s volume growth
stood at 9%, aided by an 11% yoy growth in the tooth paste category. The
company enhanced its leadership in the toothpaste category and achieved a
volume market share of 55.9% for January – June 2013 (54.7% in January – June
2012).
The growth in market share was aided by healthy growth in flagship brands such
as Colgate Dental Cream, Active salt, MaxFresh and Colgate Sensitive. The
company’s volume market share in the tooth brush category too increased to
41.4% (38.7% in January to June 2012) during January-June 2013.
Colgate continues to focus on innovation to drive its growth. The company has
recently launched Colgate Visible White tooth paste. It is the first of its kind in oralcare product category in India that offers white teeth in just one week and is aimed
at creating and growing the whitening segment in the tooth paste category.
Colgate Visible White has whitening accelerators, high cleaning silica and
polyphosphates which remove and prevent tooth surface stains for visibly whiter
teeth.
Exhibit 3: Top-line growth at 14.7% yoy
Source: Company, Angel research
Exhibit 4: Volume market share (YTD) higher on yoy basis
Source: Company, Angel research
OPM down 157bp yoy
The company’s OPM stood at 17.8%, down 157bp on a yoy basis, impacted by
higher other expenses. The Net profit before exceptional items stood at ` 115cr and
was below our estimate. During the quarter, the company recorded exceptional
gains of ` 55cr with respect to slump sale of Global, a shared service organization
to Colgate Business services Pvt Ltd, which is a 100% subsidiary of its promoter
Colgate-Palmolive USA.
6 1 1
6 5 7
6 7 0
6 8 6
7 3 6
7 7 4
7 6 3
8 1 2
8 4 5
-
5.0
10.0
15.0
20.0
25.0
-
100
200
300
400
500
600
700
800
900
1 Q 1 2
2 Q 1 2
3 Q 1 2
4 Q 1 2
1 Q 1 3
2 Q 1 3
3 Q 1 3
4 Q 1 3
1 Q 1 4
( y o y % )
( `
c r )
Top-line (LHS) yoygrowth (RHS)
54.7 54.3 54.5 55.4 55.9
25
30
35
40
45
50
55
60
Toothpaste
( % )
1Q13 2Q13 3QFY13 4Q13 1Q14
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Colgate | 1QFY2014 Result Update
August 10, 2013 4
Exhibit 5: OPM down 157bp yoy
Source: Company, Angel Research
Exhibit 6: Net Profit down by 2.4% yoy
Source: Company, Angel Research
Investment rationale Company continues to maintain market leadership: Colgate has continued to
maintain its market leadership in all categories of oral care such as tooth
paste, tooth brush and mouth wash despite intensive competitive pressure. It in
fact has gained market share from its rivals over the past one year.
Strong innovation capabilities: Colgate has continuously demonstrated its
innovation capability through launch of new products. It has launched
premium products such as Colgate Max Fresh toothbrush and Colgate 360
Battery toothbrush to counter aggressive product launches and higher ad
spend by competitors.
Outlook and valuation
We expect Colgate to report a 15.7% CAGR in its top-line and ~15.0.0% CAGR in
its earnings over FY2013-15E. At the current market price, the stock is trading at
26.8x FY2015E EPS. We maintain our Neutral rating on the stock.
19.1 17.1 19.022.3
19.4 20.316.9 18.3 17.8
59.6 59.9 60.4 59.9 59.3 58.2 60.1 60.3 61.1
-
10.0
20.0
30.0
40.0
50.0
60.0
70.0
1 Q 1 2
2 Q 1 2
3 Q 1 2
4 Q 1 2
1 Q 1 3
2 Q 1 3
3 Q 1 3
4 Q 1 3
1 Q 1 4
( % )
OPM Gross margin
1 0 0
9 9 1
1 6
1 3 1
1 1 7 1
4 5
1 1 1
1 2 3
1 1 5
(40.0)
(20.0)
-
20.0
40.0
60.0
80.0
10
30
50
70
90
110
130
150
170
1 Q 1 2
2 Q 1 2
3 Q 1 2
4 Q 1 2
1 Q 1 3
2 Q 1 3
3 Q 1 3
4 Q 1 3
1 Q 1 4
( y o y % )
( `
c r )
PAT (LHS) yoy growth (RHS)
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Colgate | 1QFY2014 Result Update
August 10, 2013 5
Exhibit 7: Peer valuation
Company Reco Mcap CMP TP Upside P/E (x) EV/Sales (x) RoE (%) CAGR #
(` cr) (`) (`) (%) FY14E FY15E FY14E FY15E FY14E FY15E Sales EPS
Asian Paints Neutral 41,351 431 - - 31.0 26.9 3.2 2.7 35.6 32.7 15.4 17.5Britannia Neutral 8,300 694 - - 32.6 27.3 1.2 1.0 35.7 34.6 16.1 15.3
Colgate Neutral 17,644 1,297 - - 31.5 26.8 4.8 4.1 100.0 91.0 15.7 15.0
Dabur Neutral 28,064 161 - - 30.2 25.6 3.9 3.3 39.2 36.7 16.2 19.5
GCPL Neutral 29,548 868 - - 34.5 29.3 3.9 3.3 24.8 24.2 18.8 18.9
GSKCHL* Neutral 16,625 3,953 - - 32.3 26.6 4.1 3.4 34.1 33.7 17.6 19.6
HUL Neutral 129,653 600 - - 35.9 33.0 4.4 3.9 113.4 87.0 12.6 11.1
ITC Neutral 257,164 325 - - 28.9 24.4 7.1 5.9 36.1 34.9 16.2 19.2
Marico Neutral 12,853 199 - - 27.5 23.0 2.4 2.1 21.4 21.0 14.8 24.0
Nestle* Neutral 48,350 5,015 - - 40.7 33.5 5.1 4.3 56.4 50.3 14.4 14.5
TGBL Neutral 9,029 146 - - 19.3 17.6 1.1 1.0 9.3 9.5 11.0 13.2
Source: Company, Angel Research
Exhibit 8: One year forward PE
Source: Company
Company background
Colgate-Palmolive India, a 51% subsidiary of Colgate Palmolive Company, USA, is
a leading FMCG player in the Indian oral care market. The oral care segment
contributes ~96% to the company's revenue, with the personal care and household
care segment contributing the balance. The company, under the Palmolive brand
name, is also present in the personal care segment.
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
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Colgate | 1QFY2014 Result Update
August 10, 2013 6
Profit & Loss statement
Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E
Total operating income 1,962 2,286 2,693 3,120 3,588 4,130
% chg 15.8 16.5 17.8 15.8 15.0 15.1Total Expenditure 1,537 1,772 2,115 2,507 2,910 3,330
Cost of Materials 777 872 1,050 1,250 1,428 1,625
Advertising Exp (Incl Prom.) 299 349 412 505 603 694
Personnel 159 193 216 249 301 347
Others 302 357 437 503 578 665
EBITDA 425 515 579 613 678 800
% chg 59.7 21.0 12.4 6.0 10.7 17.9
(% of Net Sales) 21.7 22.5 21.5 19.6 18.9 19.4
Depreciation& Amortisation 38 34 39 44 49 54
EBIT 388 480 539 569 629 746
% chg 59.3 23.8 12.3 5.6 10.5 18.6
(% of Net Sales) 19.8 21.0 20.0 18.2 17.5 18.1
Interest & other Charges 2 2 2 - - -
Other Income 98 41 120 130 133 167
(% of PBT) 20.3 7.9 18.3 18.6 17.4 18.3
Share in profit of Associates - - - - - -
Recurring PBT 485 520 658 699 762 913
% chg 38.4 7.3 26.5 6.3 9.0 19.9
Prior Period & Extra. Exp./(Inc.) - - - - (55) -
PBT (reported) 485 520 658 699 817 913
Tax 62 117 142 166 202 256
(% of PBT) 12.7 22.6 21.6 23.8 26.5 28.0
PAT (reported) 423 403 516 533 560 658
ADJ. PAT 423 403 516 533 615 658
% chg 45.8 (4.9) 28.1 3.3 15.4 6.9
(% of Net Sales) 21.6 17.6 19.2 17.1 17.1 15.9
Basic EPS (`) 31.1 29.6 32.8 36.5 41.2 48.4
Fully Diluted EPS (̀ ) 31.1 29.6 32.8 36.5 41.2 48.4
% chg 43.4 (4.9) 10.9 11.3 12.7 17.4
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
previous year numbers
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Colgate | 1QFY2014 Result Update
August 10, 2013 7
Balance Sheet
Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E
SOURCES OF FUNDS
Equity Share Capital 14 14 14 14 14 14Preference Capital - - - - - -
Reserves& Surplus 313 370 422 476 617 801
Shareholders Funds 326 384 435 490 631 814
Minority Interest - - - - - -
Total Loans 5 0 - - - -
Deferred Tax Liability (18) (17) (12) (22) (12) (12)
Long term Provisions 27 30 35 30 30
Other Long term liabilities 1 1 1 1 1
Total Liabilities 313 395 454 503 650 833
APPLICATION OF FUNDS
Gross Block 494 553 586 745 820 895
Less: Acc. Depreciation 288 325 359 402 452 505
Net Block 206 228 227 343 369 390
Capital Work-in-Progress 6 8 69 13 13 13
Goodwill 41 27 27 27 27 27
Investments 21 39 47 47 47 47
Long term loans and adv. 18 23 70 40 40
Current Assets 591 696 724 784 994 1,252
Cash 348 395 310 429 554 758
Loans & Advances 123 72 109 89 89 89
Other 120 229 305 267 351 404
Current liabilities 552 622 663 781 840 935
Net Current Assets 39 74 60 3 154 316
Mis. Exp. not written off - - - - - -
Total Assets 313 395 454 503 650 833
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
previous year numbers
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Colgate | 1QFY2014 Result Update
August 10, 2013 8
Cash Flow Statement
Y/E March (` cr) FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E
Profit before tax 485 520 588 663 817 913
Depreciation 38 34 39 44 49 54Change in Working Capital (23) (7) (81) 145 (42) 20
Interest / Dividend (Net) (24) (29) (40) (71) (66) (91)
Direct taxes paid 62 117 142 166 202 256
Others 70 36 8 (17) 57 27
Cash Flow from Operations 484 437 373 598 614 668
(Inc.)/ Dec. in Fixed Assets (111) (47) (95) (103) (75) (75)
(Inc.)/ Dec. in Investments 17 (18) (8) - - -
Cash Flow from Investing (93) (65) (103) (103) (75) (75)
Issue of Equity 0 - - - - -
Inc./(Dec.) in loans (0) (5) (0) - - -
Dividend Paid (Incl. Tax) 318 349 395 442 474 474
Interest / Dividend (Net) (24) (29) (40) (66) (61) (86)
Cash Flow from Financing (294) (325) (355) (376) (414) (388)
Inc./(Dec.) in Cash 96 48 (85) 119 125 204
Opening Cash balances 251 348 395 310 429 554
Closing Cash balances 348 395 310 429 554 758
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
previous year numbers
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Colgate | 1QFY2014 Result Update
August 10, 2013 9
Key Ratios
Y/E March FY2010 FY2011 FY2012 FY2013 FY2014E FY2015E
Valuation Ratio (x)
P/E (on FDEPS) 41.7 43.8 39.5 35.5 31.5 26.8P/CEPS 38.3 40.4 36.3 32.6 29.0 24.8
P/BV 54.1 45.9 40.5 36.0 28.0 21.7
Dividend yield (%) 1.5 1.7 1.9 2.2 2.3 2.3
EV/Sales 8.8 7.5 6.6 5.6 4.8 4.1
EV/EBITDA 40.6 33.5 34.0 29.7 25.1 21.1
EV / Total Assets 55.3 43.6 38.1 34.1 26.2 20.2
Per Share Data (`)EPS (Basic) 31.1 29.6 32.8 36.5 41.2 48.4
EPS (fully diluted) 31.1 29.6 32.8 36.5 41.2 48.4
Cash EPS 33.9 32.1 35.7 39.8 44.8 52.3
DPS 20.0 22.0 25.0 28.0 30.0 30.0
Book Value 24.0 28.2 32.0 36.0 46.4 59.9
Returns (%)
RoCE 150.3 135.8 110.8 111.5 109.2 100.6
Angel ROIC (Pre-tax) - - - - - -
RoE 156.1 113.4 109.0 107.5 100.0 91.0
Turnover ratios (x)
Asset Turnover (Gross Block) 4.5 4.4 4.6 4.9 4.9 4.9
Inventory / Sales (days) 21 25 30 24 24 24
Receivables (days) 2 12 12 11 11 11
Payables (days) 79 94 82 85 77 74
WC cycle (ex-cash) (days) (57) (51) (35) (50) (41) (39)
Note: Some of the figures from FY2011 onwards are reclassified; hence not comparable with
previous year numbers
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Colgate | 1QFY2014 Result Update
August 10, 2013 10
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Colgate
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
4. Broking relationship with company covered No
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