• OUTLOOK ARENA
  • VIEWS ON NEWS
  • MAY 30, 2000

Colgate: Volume driven growth in FY00

Colgate Palmolive (India) Ltd reported an impressive growth of 12% in its turnover to Rs 11 bn over the previous year. Profit after tax before exceptional item jumped up by 23% to Rs 518 m.

(Rs m) FY1999 FY2000 Change
Sales 9,982 11,212 12.3%
Other Income 128 152 18.8%
Expenditure 9,143 10,231 11.9%
Operating Profit (EBDIT) 839 981 16.9%
Operating Profit Margin (%) 8.4% 8.7%  
Interest 2 2 0.0%
Depreciation 246 232 -5.7%
Profit before Tax 719 899 25.0%
Other Adjustments 35 -  
Tax 297 381 28.3%
Profit after Tax/(Loss) 457 518 13.3%
Net profit margin (%) 4.6% 4.6%  
Earnings per share 3.36 3.81  

The sales growth was boosted by 11% volume growth and aggressive advertisement expenditure which constitutes 17% of its total revenue. Continuing cost control measures have enabled the company to increase its operating margins to 8.7% in the current year.

The company has maintained its strong brand equity with investment in promotional expenditure. Its core brand Colgate Dental Cream's (CDC) market share increased by 2%. The market share of Colgate Toothpowder reached an all time high at 50% in March 2000.

In the oral care market, Colgate is facing stiff competition from HLL's close up and SmithKline Beecham Consumer's Aquafresh. However the company is able to increase its market share due to its unique brand and quality of the products provided by it.

During the year, the company has launched 6 new toothbrushes which enabled it to see 27% volume growth in the segment. Also in March 2000, Colgate has re-launched its popular "Palmolive Naturals" range of beauty soaps which has received encouraging consumer response.

At the current market price of Rs 165, Colgate is trading at a P/E of 43 times its FY00 earnings on a market cap to sales ratio of 2 times. In the past the company has enjoyed P/E in the range of 50-70 times. The valuation of the company is likely to improve with the change in the perception of investors from technology to FMCG.

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 (Research Analyst) bearing Registration No. INH000000537 (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, Canada or the European Union countries, 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 (Research Analyst)
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