Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Colgate: Improving share - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • May 2, 2001

    Colgate: Improving share

    Colgate had reported an impressive double-digit growth in the topline for the first nine months of FY01. Although operating margins dipped by 70 basis points, profits jumped by 22% thanks to higher other income (on account of sale of residential apartment).

    As per the latest ORG-Marg data for March, Colgate has gained market share in toothpaste by 0.2% to 48.8%. On the other hand its nearest rival HLL has lost 0.4% to 34.9% in the segment. Over the last six months also, Colgate gained a market share of 1.1% in value terms and 2.2% in volume terms. Its key brands ‘Colgate Dental Cream’, ‘Colgate Herbal’ and ‘Colgate Cibaca Top’ were the main growth drivers.

    The company launched its biggest consumer promotion in December, ‘Colgate Ke Andar Kya Hai?’ spread across its oral care and personal care brands. This offer provides a hidden surprise in every purchase. The project is expected to aid in improving its volume growth further in the fourth quarter of the year ended March ’01.

    Financial snapshot
    (Rs m) FY00 FY01E Change
    Net sales 10,737 12,080 12.5%
    Other income 152 200 31.6%
    Total revenues 10,889 12,280 12.8%
    Operating profit 981 991 1.0%
    Depreciation 232 160 -31.0%
    Interest 2 -  
    Profit before tax 899 1,031 14.6%
    Tax 381 433 13.6%
    Profit after tax 518 598 15.4%
    Number of shares (m) 136 136  

    Key ratios
    Particulars FY00 FY01E
    Operating profit margin 9.1% 8.2%
    Effective tax rate 42.4% 42.0%
    Net profit margin 4.8% 4.9%
    EPS (Rs) 3.8 4.4

    Stiff competition and rising promotional expenses are however, putting pressure on Colgate’s margins. The company’s OPM is one of the lowest in the FMCG industry. Sliding margins is a concern considering the fact that its peers in the industry are continuously improving the margins through cost control and working capital efficiencies. The oral care market being price sensitive, it is becoming difficult for the company to raise margins through price hikes. Colgate’s established brands and pro-active management strategies are nevertheless expected to drive its future performance.

    At the current market price of Rs 178, Colgate is available at a P/E of 40 times its FY01 projected earnings. Its lower market cap to sales ratio of 2 times suggests that its long-term growth is a concern with the sluggish growth in the rural economy (Colgate derives more than 30% of its revenues from rural India) and the intense competition.



    Equitymaster requests your view! Post a comment on "Colgate: Improving share". Click here!


    More Views on News

    Colgate: Competition Impacts Volume Growth (Quarterly Results Update - Detailed)

    Nov 25, 2016

    Colgate-Palmolive (India) has announced the second quarter results financial year 2016-2017 (2QFY17). While the topline increased by 9.5% YoY, the bottomline has increased by 15.6% YoY.

    Colgate: Margins come under pressure (Quarterly Results Update - Detailed)

    Oct 4, 2016

    Colgate-Palmolive (India) has announced the first quarter results financial year 2016-2017 (1QFY17). While the topline increased by 12.4% YoY, the bottomline has increased by 8.4% YoY.

    Marico: Earnings Hit by Lower Volumes and Firming Input Prices (Quarterly Results Update - Detailed)

    Aug 9, 2017

    While GST implementation brought down volumes and profitability in the short run, Marico remains optimistic in the long run.

    Colgate: Excise Benefit Phase-off Mars FY16 Results (Quarterly Results Update - Detailed)

    Jun 2, 2016

    Colgate-Palmolive (India) declared results for the quarter and year ended March 2016. The company's revenues were up by 7% YoY, while profits declined by 11% YoY during the quarter.

    Colgate: Lower A&P Costs Prop Up Margins (Quarterly Results Update - Detailed)

    Feb 3, 2016

    Colgate-Palmolive (India) announced its results for the quarter ended December 2015. The company's revenues were up by 2% YoY, while profits rose by 22% YoY.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 09:48 AM


    • Track your investment in COLGATE with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Detailed Financial Information With Charts