Motilal Oswal is bullish on Colgate recommended buy rating on the stock with a target price of Rs 1660 in its research report dated July 29, 2020.
Motilal Oswal 's research report on Colgate
The COVID-19 led lockdown had lower impact on Colgate’s (CLGT) 1QFY21 results (v/s est.). While overall sales did decline 4.1% YoY, we reckon that toothpaste volumes (80% of sales) were flattish. However, we believe categories like toothbrushes and body-washes saw a sharper impact. - After a long time, CLGT reported market share gain in the preceding quarter (4QFY20). While the company did not give out market share for 1QFY21, we believe the flattish volumes indicate good performance under the current circumstances. We maintain Buy with a TP of INR1,660, with 15% upside.
Outlook
We maintain Buy on CLGT given that (a) the nature of the category (98% of sales from oral care) offers less uncertainty currently, (b) it has amongst the best-of-breed balance sheets, (c) valuations are moderate at 39.5x FY22E EPS, close to its 10-year average, and (d) there is a spark of an incipient market share recovery under the new Managing Director. We arrive at a TP of INR1,660/share (target multiple of 43x Jun’22E EPS, based on 5-year average).
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