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Colgate: Competition Impacts Volume Growth - Views on News from Equitymaster
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Colgate: Competition Impacts Volume Growth
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.

Performance summary
  • Total income grew by 9.5% YoY. Net sales increased by 9.4% YoY. This was on the back of healthy topline growth led by 4% volume growth, selective price increases and product mix changes. Other operating income grew by 23.5% YoY.
  • Operating profit margin declined by about 30 bps and stood at 26.2%. This is on the back of an increase in advertising expenses and increased staff cost. Operating profit grew by 8.1% YoY.
  • Other Income increased by 5.4% YoY in 2QFY17.
  • Tax rate has reduced by sharp 584bps YoY to 28.3%. Quarterly effective tax rate variation would adjust in coming quarters. Due to this, net profit saw a healthy 15.6% growth. Net profit margin was up by 90bps and stood at 17.3%.
  • The company declared Interim dividend of Rs 4 per share.

    Standalone Financial performance snapshot
    (Rs m) 2QFY16 2QFY17 Change 1HFY16 1HFY17 Change
    Net sales 9,581 10,483 9.4% 18,818 20,539 9.1%
    Other operating income 67 83 23.5% 139 158 13.5%
    Total income from operations 9,648 10,566 9.5% 18,958 20,697 9.2%
    Expenditure 7,106 7,818 10.0% 14,373 15,832 10.2%
    Operating profit (EBDITA) 2,543 2,748 8.1% 4,585 4,865 6.1%
    Operating profit margin (%) 26.5% 26.2% 24.4% 23.7%
    Other income 107 113 5.4% 184 209 13.7%
    Interest
    Depreciation 269 333 23.7% 522 649 24.4%
    Exceptional Items -313 0
    Profit before tax 2380 2527 6.2% 3933 4424 12.5%
    Tax 812 714 -12.0% 1205 1354 12.3%
    Effective tax rate 34.1% 28.3% 30.6% 30.6%
    Profit after tax/(loss) 1,568 1,813 15.6% 2,728 3,070 12.6%
    Net profit margin (%) 16.4% 17.3%
    No. of shares (m) 272
    Fully diluted EPS (Rs)* 22.5
    P/E (x)* 41.4

    *Based on trailing 12-months earnings

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