Colgate Palmolive (India) – A Shiny Idea

  • Date: 25th May 2020 ;  CMP: Rs 1,313 
  • Large Cap – Mkt Cap Rs. 35,700 and Industry: Consumer – FMCG 
  • Valuation: P/E at 37.3 
  • Advise: BUY 

jainmatrix investments, colgate palmolive

Summary

Overview: Colgate Palmolive (India) is the leader in India’s oral care market with a 49% share. Their range includes toothpastes, toothpowder, toothbrushes, mouthwashes and personal care products products under the Colgate and Palmolive brands. FY20 revenues were ₹ 4,574 crores, and profits ₹ 816 cr. CPL today has one of the widest distribution networks in India – a logistical marvel with 61 lakh retail outlets. Most of the products of CPL were part of the ‘Essential products’ that were allowed to be distributed even during lockdown. Also by May 4th, all CPL plants were allowed to open. Given all this, we feel that CPL will be less disrupted than most consumer firms through Q1 and Q2 FY21 due to the lockdown.

Key Risks: 1) Covid 19 lockdown in Q1FY20 will impact both mfg. and the demand as supply chains as well as outlets have been closed 2) strong competition 3) Indian preferences for natural and ayurvedic products

Advice: BUY with a May 2022 target of ₹ 1,555, a 18.5% gain

The entire report in PDF form is available hereJainMatrix Investments_Colgate Palmolive Ltd_May2020

Disclaimer and Disclosures 

  • Punit Jain has no holding in CPL. In addition, JM and its promoters/ employees have no financial interest in CPL and no known material conflict of interest as on date of publication of this report.
  • This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor.
  • JM has been publishing equity research reports since Nov 2012, and is registered with SEBI as a Research Analyst since 2016. Any questions should be directed to the director of JainMatrix Investments at jain@jainmatrix.com

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