Emkay Global Financial is bullish on Colgate-Palmolive India has recommended buy rating on the stock with a target price of Rs 1500 in its research report dated May 22, 2020.
Emkay Global Financial's report on Colgate-Palmolive India
Colgate's Q4FY20 performance was weak. EBITDA/adj. PAT fell 15%/5%, higher than expected. Revenue was down 7%, while volume declined 8% - both in line and largely impacted by the Covid-19-led disruption in March end.Growth trends were better in Jan-Feb before weakening in March end. After a slight decline in 2019, market shares saw a pick-up in the Mar’20 quarter, with an 80bps MoM improvement in March, which is positive.Colgate seems more aggressive and agile now, with stronger innovations, continued ad spends behind the core during disruptions and faster ramp-up in distribution (including ecommerce), which should help gain shares over peers, in our view.
Outlook
In addition, Colgate’s portfolio offers steady visibility and is likely to be more resilient and less affected by the shifts in consumption post the disruption. Maintain Buy, with a revised TP of Rs1,500 (from Rs1,450) based on 40x Jun-22 EPS.
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