ICICI Direct's research report on Colgate Palmolive
Colgate reported robust results with 7.8% consolidated revenue growth led by double digit domestic sales growth of 10.1%. We believe growth was largely driven by volumes given the company has significantly increased its marketing spends in brand building & promotions. Further, we believe new mouth spray also started contributing to revenues. CPIL launched Oil Pulling & toothpaste for diabetics during the quarter. The company also launched Naturals toothbrush portfolio with the launches of Super Flexi Salt and Zig Zag Turmeric. Given the sharp decline in commodity cost, gross margins expanded 400 bps. Further it has saved 244 bps in overhead spends through various cost cutting measures post pandemic. However, the company has significantly increased its advertisement spend (360 bps higher) during the quarter. Operating profit witnessed strong growth of 17.3% to rS 370.6 crore. Operating margins expanded 253 bps to 30.1%. Led by healthy growth in operating profit, lower interest cost & depreciation provisioning, net profit witnessed a robust growth of 24.7% to rS 248.4 crore.
Outlook
We maintain our BUY rating with a revised target price of rS 1820/share (earlier rS 1700).
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