Please refer to important disclosures at the end of this report
1
1
(` cr)
4QFY20
4QFY19
% yoy
3QFY20
% qoq
Revenue
1,071
1,154
(7.1)
1,147
EBITDA
263
307
(14.3)
316
(16.8)
OPM (%)
24.5
26.6
(206bp)
27.6
(301bp)
Reported PAT
204
200
2.0
199
2.5
Source: Company, Angel Research
For 4QFY20, Colgate Palmolive India Ltd (CPIL) posted results that were below our
expectations on both top-line and bottom-line fronts. Revenue de-
grew by ~7% yoy;
reported operating margins contracted by 206bps yoy. On the bottom-
line front,
CPIL reported adj. PAT growth of ~2% yoy to `204cr due to lower taxes.
Lockdown impacted revenue growth negatively: CPIL’s top-line de-
grew by ~7% yoy
to `1,071cr (volume declined by ~8%). Top-
line was negatively impacted mainly
due COVID-19 lockdown. The company is currently operating at 75-
80% capacity
with focus on availability of fast-moving SKUs. In Q4, it
launched hand sanitizer and
new variant in toothbrus
h segment i.e. bamboo toothbrush and natural’s variant in
Colgate Zig Zag toothbrush. Further, Colgate launched new sub segment with
Colgate kids’ toothpaste with no
artificial colors, preservatives, flavors and
sweeteners in urban India and modern trade. For 2019,
CPIL had stable market
share however, in 2020 YTD, Colgate gained market share. In March 20
20, Colgate
brand’s market share increased by 80bps. The company continued with its ad
-
spends even during the current crisis
PAT growth remains flat: On t
he operating front, the company reported margin
contraction, down 206bps yoy on the
back of higher employee and selling &
administration cost. On the bottom-
line front, CPIL reported adj. PAT growth of ~2%
yoy to `204cr on the back of lower taxes.
Outlook and Valuation: We believe that the CPIL will
ultimately be able to see
sharper market share gains in toothpastes segment on the back of higher ad-spends
,
new product launches, strong brand and wide distribution network.
Thus, we
maintain BUY on the stock with Target Price of `1,588.
Key Financials
Y/E March (` cr)
FY2019
FY2020 FY2021E FY2022E
Net sales 4,462 4,525 4,566 4,931
% chg 6.6 1.4 0.9 8.0
Adj. Net profit 755 816 786 900
% chg 10.8 8.1 (3.8) 14.5
EBITDA margin (%) 27.7 26.6 26.6 27.9
EPS (`) 27.8 30.0 28.9 33.1
P/E (x) 47.3 43.8 45.5 39.7
P/BV (x) 24.7 20.1 17.1 14.6
RoE (%) 52.2 46.0 37.6 36.8
RoCE (%) 70.4 54.1 46.5 45.9
EV/Sales (x) 7.9 7.8 7.7 7.1
EV/EBITDA (x)
Source: Company, Angel Research
BUY
CMP `1,314
Target Price `1,588
Investment Period 12 months
Stock Info
Sector FMCG
Market Cap (` cr) 35,726
Net Debt (` cr)
(338)
Beta 0.4
52 Week High / Low 1,641/1,065
Avg. Daily Volume 29,265
Face Value (`) 1
BSE Sensex 30,673
Nifty 9,039
Reuters Code COLG.BO
Bloomberg Code CLGT.IN
Shareholding Pattern (%)
Promoters
51.0
MF / Banks / Indian
10.0
FII / NRIs / OCBs
16.8
Indian Public/Others
22.2
Abs.(%) 3m 1yr 3yr
Sensex
(24.0)
(21.6) 0.3
CPIL (2.3) 14.0 30.7
Historical share price chart
Source: Company, Angel Research
Amarjeet S Maurya
022-40003600 Ext: 6831
amarjeet[email protected]lbroking.com
Colgate-Palmolive India
Performance Update
0
200
400
600
800
1000
1200
1400
1600
1800
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Feb-19
May-19
Aug-19
Nov-19
Feb-20
May-20
4
QFY20 Result Update | FMCG
May 23, 2020
Colgate-Palmolive India | 4
QFY2020 Result
Update
May 23, 2020
2
4QFY20 Performance
Y/E March (` cr)
4QFY20
4QFY19
% yoy
3QFY20
% qoq
FY2020 FY2019
% chg
Net Sales 1071 1154
1,147
(6.6) 4525 4462
1.4
Consumption of RM
379
409
393
(3.7)
1,573
1,559
0.9
(% of Sales)
35.3
35.4
34.3
34.8
34.9
Staff Costs
90
73
22.3
77
16.7
332 296
12.3
(% of Sales)
8.4
6.4
6.7
7.3
6.6
Selling & Adm Expenses
156
156
143
8.4
626
565
10.9
(% of Sales)
14.5
13.5
12.5
13.8
12.7
Other Expenses
184
208
(11.5)
218
(15.3)
792
807
(% of Sales)
17.2
18.1
19.0
17.5
18.1
Total Expenditure
808
847
831
(2.7)
3,323
3,226
3.0
Operating Profit
263
307
(14.3)
316
(16.8)
1,202
1,236
(2.8)
OPM
24.5
26.6
27.6
26.6
27.7
Interest
2
3
(20.8)
3
(32.2) 10 3
284.8
Depreciation
46
39
17.3
52
(10.3) 198 159
24.4
Other Income
20
12
64.4
6
238.6
49 68
(27.8)
PBT (excl. Ext Items)
234
277
(15.4)
267
(12.4)
1,043
1,143
(8.7)
Ext (Income)/Expense
-
-
-
- -
PBT (incl. Ext Items)
234
277
(15.4)
267
(12.4)
1,043
1,143
(8.7)
(% of Sales)
21.9
24.0
23.3
23.1
25.6
Provision for Taxation
30
79
(61.9)
68
(55.8)
227
367
(38.2)
(% of PBT)
12.9
28.6
25.6
21.7
32.1
Reported PAT
204
198
3.3
199
2.5
816.
776
5.3
PATM
19.1
17.1
17.4
18.0
17.4
Extra-ordinary Items
(3)
21
Adj PAT
204
200
2.0
199
2.5
816
755
8.1
Source: Company, Angel Research
Colgate-Palmolive India | 4
QFY2020 Result
Update
May 23, 2020
3
Outlook and Valuation
We believe that the CPIL will ultimately be able to see sharper market share gains in
toothpastes segment on the back of higher ad-spends, new product launches, strong
brand and wide distribution network. Thus, we maintain BUY on the stock with Target
Price of `1,588.
Downside risks to our estimates
Competition: Market share loss due to stiff competition could impact the company’s
profitability.
Company Background
Colgate Palmolive India Limited (CPIL) is India's leading provider of scientifically
proven oral care products. The range includes toothpastes, toothpowder,
toothbrushes and mouthwashes under the 'Colgate' brand, as well as a specialized
range of dental therapies under the banner of Colgate Oral Pharmaceuticals. The
company also provides a range of personal care products under the `Palmolive'
brand name. Colgate Palmolive Company, U.S.A. is the company's ultimate holding
company.
Colgate-Palmolive India | 4
QFY2020 Result
Update
May 23, 2020
4
Y/E March (` cr) FY2018 FY2019
FY2020
FY2021E
FY2022E
Net Sales 4,188 4,462
4,525
4,566
4,931
% chg 5.2 6.6
1.4
0.9 8.0
Total Expenditure 3,086 3,226
3,323
3,351
3,555
Raw Material 1,489 1,559
1,573
1,598
1,726
Personnel
306
296
332
306
330
Others Expenses 1,291 1,372
1,418
1,447
1,499
EBITDA 1,102 1,236
1,202
1,214
1,376
% chg 16.8 12.2
1.1 13.3
(% of Net Sales) 26.3 27.7
26.6
26.6 27.9
Depreciation& Amortisation
157
159
198
205
214
EBIT
946
1,077
1,004
1,010
1,162
% chg 16.7 13.9
0.6 15.1
(% of Net Sales) 22.6 24.1
22.2
22.1 23.6
Interest & other Charges
-
3
10
10
10
Other Income 37 68
49
50
50
(% of PBT) 3.8 6.0
4.7
4.8 4.2
Recurring PBT
983
1,143
1,043
1,050
1,203
% chg 15.5 16.2
0.6 14.5
Tax
310
367
227
264
303
(% of PBT) 31.5 32.1
21.7
25.2 25.2
PAT (reported)
673
776
816
786
900
Extraordinary Items (8) 21
-
-
-
ADJ. PAT
681
755
816
786
900
% chg 18.0 10.8
8.1
(3.8) 14.5
(% of Net Sales) 16.3 16.9
18.0
17.2 18.2
Basic EPS (`) 25.0 27.8
30.0
28.9
33.1
Fully Diluted EPS (`) 25.0 27.8
30.0
28.9
33.1
% chg 18.0 10.8
8.1
(3.8) 14.5
Colgate-Palmolive India | 4
QFY2020 Result
Update
May 23, 2020
5
Balance Sheet
Y/E March (` cr) FY2018
FY2019
FY2020E
FY2021E
FY2022E
SOURCES OF FUNDS
Equity Share Capital 27
27
27
27
27
Reserves& Surplus 1,497
1,420
1,746
2,060
2,420
Shareholders Funds 1,525
1,447
1,773
2,088
2,448
Total Loans
-
83
83
83
83
Deferred Tax Liability 36
31
31
31
31
Total Liabilities 1,560
1,561
1,887
2,202
2,562
APPLICATION OF FUNDS
Gross Block 1,546
1,748
1,948
2,148
2,348
Less: Acc. Depreciation
400
557
755
959
1,173
Net Block 1,146
1,191
1,193
1,188
1,175
Capital Work-in-Progress
159
199
199
199
199
Investments 31
31
31
31
31
Current Assets 1,228
1,206
1,464
1,773
2,153
Inventories
227
249
310
338
405
Sundry Debtors
201
210
236
263
324
Cash
456
399
421
487
536
Loans & Advances
177
152
226
365
493
Other Assets
167
196
272
320
394
Current liabilities 1,004
1,066
999
989
996
Net Current Assets
224
140
465
784
1,157
Deferred Tax Asset
-
-
-
-
-
Mis. Exp. not written off
-
-
-
-
-
Total Assets 1,560
1,561
1,887
2,202
2,562
Colgate-Palmolive India | 4
QFY2020 Result
Update
May 23, 2020
6
Cash flow Statement
Y/E March (` cr)
FY2018
FY2019
FY2020E
FY2021E
FY2022E
Profit before tax
995
1112
1043
1050
1203
Depreciation
157
159
198
205
214
Change in Working Capital
(89)
149
(303)
(253)
(325)
Interest / Dividend (Net)
(29)
(32)
(10)
(10)
(10)
Direct taxes paid
(347)
(414)
(227)
(264)
(303)
Others
8
8
0
0
0
Cash Flow from Operations
694
983
702
728
779
(Inc.)/ Dec. in Fixed Assets
(209)
(104)
(200)
(200)
(200)
(Inc.)/ Dec. in Investments
1
9
0
0
0
Cash Flow from Investing
(207)
(96)
(200)
(200)
(200)
Issue of Equity
0
0
0
0
0
Inc./(Dec.) in loans
0
0
0
0
0
Dividend Paid (Incl. Tax)
(299)
(646)
(490)
(471)
(540)
Interest / Dividend (Net)
(81)
(168)
31
10
10
Cash Flow from Financing
(380)
(815)
(459)
(462)
(530)
Inc./(Dec.) in Cash
107
73
43
66
48
Opening Cash balances
199
305
378
421
487
Closing Cash balances
305
378
421
487
536
Colgate-Palmolive India | 4
QFY2020 Result
Update
May 23, 2020
7
Key Ratios
Y/E March
FY2018
FY2019 FY2020E
FY2021E
FY2022E
Valuation Ratio (x)
P/E (on FDEPS)
52.4
47.3 43.8
45.5
39.7
P/CEPS
43.1
38.2 35.2
36.1
32.1
P/BV
23.4
24.7 20.1
17.1
14.6
Dividend yield (%) 0.0 0.0 0.0
0.0
0.0
EV/Sales 8.4 7.9 7.8
7.7
7.1
EV/EBITDA
32.0
28.6 29.4
29.1
25.6
EV / Total Assets
22.6
22.7 18.7
16.0
13.8
Per Share Data (`)
EPS (Basic)
25.0
27.8 30.0
28.9
33.1
EPS (fully diluted)
25.0
27.8 30.0
28.9
33.1
Cash EPS
30.5
34.4 37.3
36.4
40.9
DPS 0.0 0.0 0.0
0.0
0.0
Book Value
56.1
53.2 65.2
76.8
90.0
Returns (%)
ROCE
62.0
70.4 54.1
46.5
45.9
Angel ROIC (Pre-tax)
91.2
98.0 71.5
61.1
59.2
ROE
44.7
52.2 46.0
37.6
36.8
Turnover ratios (x)
Asset Turnover (Gross Block) 2.7 2.6 2.3
2.1
2.1
Inventory / Sales (days)
20
20
25
27
30
Receivables (days)
18
17
19
21
24
Payables (days)
55
50
47
44
40
Working capital cycle (ex-cash) (days)
(17)
(13)
(3)
4
14
Source: Company, Angel Research
Colgate-Palmolive India | 4
QFY2020 Result
Update
May 23, 2020
8
Research Team Tel: 022
-
39357800
E
-
mail: rese[email protected]lbroking.com Website: www.angelbroking.com
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Ratings (Returns):
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (
-
5 to 5%)
Reduce (-5% to -15%) Sell (< -15%)
Disclosure of Interest Statement
Colgate
-
Palmolive (India)
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No