Colgate: Volume driven strategy - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Colgate: Volume driven strategy

Sep 18, 2000

In the last three years, Colgate Palmolive (India) Limited has gone through the tough period. The company had lost its market share and became a slow mover stock for investors. It is now planning to see a double-digit growth in its topline led by volume sales. As per the ORG-Marg estimates, Rs 10 bn toothpaste market had reported a negative growth in FY00. The penetration of toothpaste in India is still less than 30%. The market is growing at a slower pace and in the past few years growth rate is further impacted due to continuous increase in the prices and increasing competition. Colgate is the leader in the market with 50% share and its close competitor HLL commands a 35% market share.

As can be seen from the table below, in FY00, Colgate has successfully grown its volume sales and has also effected a price increase of around 8% in soaps and toilet preparations segment which contribute the major portion of total sales. The company would continue with its strategy of growing topline boosted by volumes by introducing new products and re-launching some of the successful brands. During the year, the company has re-launched Colgate Dental Cream and Colgate Fresh Energy Gel. It will also continue its focus on Colgate Total, Sensation Whitening and Cibaca. Concentration on the volumes could only drive the growth in this price sensitive market.

Revenue mix
Soaps, Cosmetics and Toilet Preparation
Year Sales Qty (m) Sales (Rs m) Price (Rs/Unit)
FY94 602 5,590 9.3
FY95 628 6,166 9.8
FY96 714 7,340 10.3
FY97 849 8,571 10.1
FY98 820 8,906 10.9
FY99 750 8,724 11.6
FY00 786 9,887 12.6
Tooth Brushes & Shave Brushes
FY94 89 774 8.7
FY95 107 811 7.6
FY96 186 1,015 5.5
FY97 171 958 5.6
FY98 164 925 5.6
FY99 139 853 6.1
FY00 166 941 6.2

At the current market price of Rs 160, Colgate is available at a P/E of 42 times its FY00 earnings and 37 times its projected FY01 earnings. Its market cap to sales ratio of 1.9 times suggests that its long-term growth is a concern, as the market growth remains low and the competition intensifies. The perception about the stock is likely to change gradually with improved financial performance and aggressive strategies implemented by the company.

Equitymaster requests your view! Post a comment on "Colgate: Volume driven strategy". Click here!


More Views on News

Colgate Q4 Results Doesn't Excite Investors Despite Strong Operational Performance (Views On News)

May 18, 2021

A major concern for Colgate is its market share loss in the toothpaste category to Dabur and Patanjali.

COLGATE Announces Quarterly Results (3QFY21); Net Profit Up 24.7% (Quarterly Result Update)

Jan 29, 2021 | Updated on Jan 29, 2021

For the quarter ended December 2020, COLGATE has posted a net profit of Rs 2 bn (up 24.7% YoY). Sales on the other hand came in at Rs 12 bn (up 7.4% YoY). Read on for a complete analysis of COLGATE's quarterly results.

COLGATE Announces Quarterly Results (2QFY21); Net Profit Up 12.3% (Quarterly Result Update)

Oct 22, 2020 | Updated on Oct 22, 2020

For the quarter ended September 2020, COLGATE has posted a net profit of Rs 3 bn (up 12.3% YoY). Sales on the other hand came in at Rs 13 bn (up 6.0% YoY). Read on for a complete analysis of COLGATE's quarterly results.

COLGATE 2018-19 Annual Report Analysis (Annual Result Update)

Sep 30, 2019 | Updated on Sep 30, 2019

Here's an analysis of the annual report of COLGATE for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of COLGATE. Also includes updates on the valuation of COLGATE.

More Views on News

Most Popular

Hotel Stocks Will Reward Investors (Fast Profits Daily)

Jun 8, 2021

This is why I'm bullish on the hotel and hospitality sector.

My 'Unlock' Investments (Fast Profits Daily)

Jun 11, 2021

The best unlock investments you can make in the market.

The Most Visible Sign of India's Revival is on Two Wheels (Profit Hunter)

Jun 9, 2021

Investing in the best stocks could result in wealth compounding on a massive scale.

How I Discovered a 400-Year-Old Open Secret to Extreme Wealth (Profit Hunter)

Jun 11, 2021

Charlie Munger's open secret about investing success.


India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms


Jun 18, 2021 (Close)


  • 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