neutral seeking aggression · 2018. 7. 28. · colgate-palmolive (india) neutral . hdfc securities...

RESULTS REVIEW 1QFY19 27 JUL 2018

Colgate-Palmolive (India) NEUTRAL

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

Seeking aggression Colgate registered 6.6/4% revenue/volume growth (exp. 11/6%). Despite favorable base (-5% in 1QFY18), good traction for Swarna Vedshakti and improving consumption dynamics, volume growth remained tepid. Soft input inflation and cost control initiatives (flat Ad spend) drove EBITDA/PAT by 27/21% (exp. 18/18%). However, we are not encouraged by margin expansion, since we wanted to see an aggressive approach from the market leader in a challenging period. Muted ad spend and gross margin expansion in the scenario of continued market share fall and improving consumption dynamics, reflects weak management strategy.

Market share of toothpaste continued to decline (190bps YoY fall to 52.4%) along with toothbrush (40bps YoY fall to 44.6%). Dabur and Patanjali continue to gain share. Toothpaste industry continues to chug along at 5-6% volume growth. Rural is growing at slower than historical rates (150bps faster than urban vs. historical gap of 300-400bps). We believe with recovery in rural consumption, volume growth can accelerate to 6-7% for the category. Naturals segment (25% industry mix) continues to outperform. Colgate amidst Swarna Vedshakti’s (~2% market share) pan-India launch cut its price by 15%.

Management is committed to driving Swarna’s geographic reach with wider SKUs. We are yet to see signs of recovery and believe market share pressure will persist in the short-term. We model 11% revenue CAGR during FY18-21E, which factors in pass through of higher inflation and recovery in rural demand. Owing to stiff competition, we expect Colgate to continue to spend abundantly on marketing (~13%). We value Colgate based on P/E of 35x on Jun-20 EPS to arrive at a TP of Rs 1,185 (Rs 1,219). Highlights of the quarter 27% EBITDA growth: GM expanded by 255bps to

65.9% owing to soft commodity inflation. A&P growth was flat YoY (-8% in 1QFY18). Employee/other expenses increased by 3/3%. EBITDA margin expanded by 436bps to 27% (exp. of 24%).

APAT grew by 21%: Depreciation/other income declined/taxes grew by 6/-26/58% YoY resulting in APAT (excluding profit of Rs 341mn from sale of plant) growing by 21% to Rs 1.65bn vs. (exp. of Rs 1.61bn).

Near-term outlook: We prefer other mid-cap FMCG stocks like (Emami, Marico and Dabur) which provide stronger earnings visibility.

Financial Summary (Rs mn) 1QFY19 1QFY18 YoY (%) 4QFY18 QoQ (%) FY17 FY18 FY19E FY20E FY21E Net Sales 10,413 9,781 6.5 10,917 (4.6) 39,818 41,880 45,628 50,806 56,508 EBITDA 2,816 2,218 26.9 3,075 (8.4) 9,444 11,124 12,588 14,580 16,617 APAT 1,656 1,364 21.4 1,791 (7.5) 5,774 6,637 7,825 8,931 10,285 Diluted EPS (Rs) 6.1 5.0 21.4 6.6 (7.5) 21.2 24.4 28.7 32.8 37.8 P/E (x) 51.1 44.5 37.7 33.0 28.7 EV / EBITDA (x) 30.9 26.1 23.1 19.7 17.0 Core RoCE (%) 64.5 64.4 69.6 81.9 96.1 Source: Company, HDFC sec Inst Research

INDUSTRY FMCG

CMP (as on 26 Jul 2018) Rs 1,085

Target Price Rs 1,185

Nifty 11,167 Sensex 36,985

KEY STOCK DATA Bloomberg CLGT IN

No. of Shares (mn) 272 MCap (Rs bn)/(US$ mn) 295/4,298 6 m avg traded value (Rs mn) 461

STOCK PERFORMANCE (%) 52 Week high / low Rs 1,274/1,006 3M 6M 12M Absolute (%) (0.8) (4.9) 2.7 Relative (%) (7.3) (7.5) (11.5)

SHAREHOLDING PATTERN (%) Promoters 51.00 FIs & Local MFs 15.14 FPIs 11.45 Public & Others 22.41 Source : BSE

Naveen Trivedi [email protected] +91-22-6171-7324 Siddhant Chhabria [email protected] +91-22-6171-7336

mailto:[email protected]

COLGATE-PALMOLIVE : RESULTS REVIEW 1QFY19

Page | 2

Quarterly Financials Particulars (Rs mn) 1QFY19 1QFY18 YoY (%) 4QFY18 QoQ (%) FY18 FY17 YoY (%) Net Revenue 10,413 9,781 6.5 10,917 (4.6) 41,880 39,818 5.2 Material Expenses 3,550 3,584 (1.0) 3,750 (5.3) 14,901 14,763 0.9 Employee Expenses 749 727 3.0 758 (1.2) 3,059 2,885 6.0 ASP Expenses 1,435 1,434 0.1 1,436 (0.0) 5,268 5,117 3.0 Other Operating Expenses 1,863 1,818 2.5 1,898 (1.8) 7,528 7,617 (1.2) EBITDA 2,816 2,218 26.9 3,075 (8.4) 11,124 9,436 17.9 Depreciation 394 373 5.6 405 (2.7) 1,565 1,332 17.5 EBIT 2,422 1,845 31.3 2,670 (9.3) 9,559 8,103 18.0 Other Income 92 125 (26.4) 85 8.0 388 411 (5.6) PBT 2,514 1,970 27.6 2,755 (8.8) 9,947 8,514 16.8 Exceptional 341 - na (117) na (117) - PBT after exceptional 2,855 1,970 44.9 2,639 8.2 9,830 8,514 15.5 Tax 960 606 58.4 751 27.8 3,097 2,740 13.0 RPAT 1,895 1,364 39.0 1,888 0.4 6,734 5,774 16.6 APAT 1,656 1,364 21.4 1,791 (7.5) 6,637 5,774 14.9 EPS (adjusted) 6.1 5.0 21.4 6.6 (7.5) 24.4 21.2 14.9 Source: Company, HDFC sec Inst Research

Margin Analysis

Particulars 1QFY19 1QFY18 YoY (bps) 4QFY18 QoQ

(bps) FY18 FY17 YoY (bps)

Material Expenses % Net Sales 34.1 36.6 (255) 34.3 (26) 35.6 37.1 (150) Employee Expenses % Net Sales 7.2 7.4 (24) 6.9 25 7.3 7.2 6 ASP Expenses % Net Sales 13.8 14.7 (87) 13.1 63 12.6 12.9 (27) Other Operating Expenses % Net Sales 17.9 18.6 (70) 17.4 51 18.0 19.1 (116) EBITDA Margin (%) 27.0 22.7 436 28.2 (113) 26.6 23.7 286 Tax Rate (%) 33.6 30.8 285 28.5 516 31.5 32.2 (68) APAT Margin (%) 18.2 13.9 426 17.3 91 16.1 14.5 158 Source: Company, HDFC sec Inst Research

Net revenue and volume growth of 6.6% and 4% was below our expectation. Competitive pressure from Dabur and Patanjali remained high Recent price cut of 15-16% for Swarna Vedshakti is to boost volume in natural segment Management expects recovery in the oral care market and expect market to grow by single digit (~6%) volume during FY19 Not encouraged by flat advertisement spend particularly when market share is falling and new launches needs extra efforts EBITDA margin expansion was driven by soft commodity inflation, favourable base and cost control initiatives


Page | 3

Net Revenue Volume Growth

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 growth is based on old AS

Source: Company, HDFC sec Inst Research

Gross Margin Change EBITDA Margin Change

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 change is based on old AS

Source: Company, HDFC sec Inst Research Note: 1QFY16-4QFY16 change is based on old AS

Volume growth challenges have persisted for the past several quarters driven by slower category growth and market share losses Soft commodity inflation leading to gross margin expansion Favourable base and cost control initiatives continue to expand EBITDA margin

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

-

3,000

6,000

9,000

12,000

1QFY

162Q

FY16

3QFY

164Q

FY16

1QFY

172Q

FY17

3QFY

174Q

FY17

1QFY

182Q

FY18

3QFY

184Q

FY18

1QFY

19

Net Sales YoY Growth - RHS

(Rs mn) (%)

3.0 3.0 1.0

6.0 6.0 4.0

(12.0)

(3.0)(5.0)

(0.9)

12.0

4.0 4.0

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1 QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

(%)

86

137 120

34

139

91 76

142 108

41

130

302

255

-

110

220

330

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

(bps)

(26)

591

326

(211)(105)

(35) (47) (21)

183 171

286

462 436

(300)

(50)

200

450

700

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

(bps)


Page | 4

Employee Expense Advertising Expense



Gross Margin EBITDA Margin

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

We expect advertising spend would increase in the coming quarters. Colgate will spend more aggressively to support new launches

12

(16)

9 13

16

26

(1)

2

(2)

13 15

(1)

3

4.0

5.0

6.0

7.0

8.0

(25)

(10)

5

20

35

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1 QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

Employee Gr. (%) Employee (% of sales) - RHS(%)

11

(17)(11)

28 24 28

(21)

24

(8) (7)

44

(0)

0

-

5

10

15

20

25

(30)

-

30

60

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

Advertising Gr. (%) Advertising (% of sales) - RHS(%)

60.9

62.1 63.1

61.2 62.3

63.0 63.9

62.6 63.4 63.4

65.2 65.7

65.9

57.0

59.0

61.0

63.0

65.0

67.0

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

(%)

21.9

26.4 24.9

23.8

20.9

26.0 24.5

23.5 22.7

27.7 27.3 28.2 27.0

10.0

15.0

20.0

25.0

30.0

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

(%)


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Colgate’s Toothpaste Market Share Colgate’s Toothbrush Market Share

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research

Market share declines for Colgate in toothpaste have come from its premium segment (Colgate Sensitive and Colgate Total). The premium segment revenue contribution now is at ~4% vs. ~8% earlier Colgate continued to face intense competition in the naturals segment (25% mix for industry) which is dominated by Dabur and Patanjali (80% combined share)

57.8

57.9

57.6

57.3

55.3

55.9

55.7

55.4

55.1

54.3

54.0

53.7

53.4

52.4

49.0 50.0 51.0 52.0 53.0 54.0 55.0 56.0 57.0 58.0 59.0

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

(%)

42.7

43.3

43.8

45.8

46.8

46.6

47.0

47.4

45.0

45

.5

45.1

44.8

44.6

40.0

41.0

42.0

43.0

44.0

45.0

46.0

47.0

48.0

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

2QFY

17

3QFY

17

4QFY

17

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

(%)


Page | 6

Toothpaste Market Performance (Quarterly) Toothpaste Market Performance (Yearly)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Toothpaste Market Share


Toothpaste volume market growth has also slowed down~6% during the last 3 quarters Higher competitive intensity from Dabur and Patanjali has been impacting Colgate’s market share

-5%

0%

5%

10%

15%

20%

25%

1QCY

15

2QCY

15

3QCY

15

4QCY

15

1QCY

16

2QCY

16

3QCY

16

4QCY

16

1QCY

17

2QCY

17

3QCY

17

4QCY

17

1QCY

18

Volume Growth Price Growth

0.1% 2.1%

7.4%6.1%

5.9%

6.5%

0.0%

4.0%

8.0%

12.0%

16.0%

CY15

CY16

CY17


48.8 48.452.2 53.3 52.7 54.5 56.1 57.0 57.4 55.6 53.7

25.1 24.6 22.8 22.6 23.3 23.5 22.8 21.3 19.6 19.1 17.6

11.9 12.2 12.9 13.7 14.8 14.0 13.4 13.4 13.9 15.3 15.5

0.0 0.1 0.4 0.6 1.3 2.86.7

0.0

10.0

20.0

30.0

40.0

50.0

60.0

CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17

Colgate Competitor 1 Competitor 2 Competitor 3(%)


Page | 7

Toothbrush Market Performance (Quarterly) Toothbrush Market Performance (Yearly)

Source: Company, HDFC sec Inst Research Source: Company, HDFC sec Inst Research Toothbrush Market Share


Toothbrush volume market growth has been steady at ~10% while price growth has declined to 2% in last 3 quarters vs. 8-9% average during FY16-FY17 Higher competitive intensity from P&G (Oral-B) and unorganized players in toothbrush led to 260bps decline in vol. market share to 44.8%

-16.0%

-8.0%

0.0%

8.0%

16.0%

24.0%

32.0%

1QCY

15

2QCY

15

3QCY

15

4QCY

15

1QCY

16

2QCY

16

3QCY

16

4QCY

16

1QCY

17

2QCY

17

3QCY

17

4QCY

17

1QCY

18


9.3%

-4.1%

12.0%

10.3%

11.0%

3.1%

-7.0%

1.0%

9.0%

17.0%

25.0%

CY15

CY16

CY17


33.438.4 38.0 35.9

39.842.3 42.8 44.4

47.3 45.1

11.4 11.914.8

17.8 18.8 18.4 18.2 17.414.6 14.2

5.9 6.4 7.2 7.2 6.7 7.5 7.9 9.3 10.7 11.00.0

10.0

20.0

30.0

40.0

50.0

60.0

CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17

Colgate Competitor 1 Competitor 2(%)


Page | 8

Per Capita Consumption


Assumptions

FY17 FY18 FY19E FY20E FY21E Toothpaste revenue growth 2.7 5.8 8.3 11.3 11.3 Toothpaste volume growth (2.0) 2.5 5.1 7.5 7.5 GM (%) 62.9 64.4 65.5 66.3 66.8 Employee (% of sales) 7.2 7.3 7.2 7.0 6.8 ASP (% of sales) 12.9 12.6 13.0 13.0 13.0 Distribution (% of sales) 3.6 3.1 3.1 3.1 3.1 Royalty (% of sales) 5.2 4.9 4.9 4.9 4.9 Other expenses (% of sales) 10.3 9.9 9.7 9.6 9.6 EBITDA Margin (%) 23.7 26.6 27.6 28.7 29.4 Tax Rate (%) 32.2 31.5 32.0 32.0 32.0 Source: Company, HDFC sec Inst Research

603

458

312

212158

0

100

200

300

400

500

600

700

Brazil USA Philipines China India

With stiff competition, we expect Colgate to continue to spend abundantly on marketing (13%). We foresee low-margin expansion of ~300bps over FY18-21E vs. ~600bps in the past three years


Page | 9

Estimate change

NEW OLD Change (%)

FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E Net Sales 45,628 50,806 56,508 46,703 52,693 58,606 -2% -4% -4% EBITDA 12,588 14,580 16,617 12,761 14,833 16,906 -1% -2% -2% PAT 7,825 8,931 10,285 7,922 9,353 10,771 -1% -5% -5% EPS 28.7 32.8 37.8 29.1 34.4 39.6 -1% -5% -5% Peer Set Comparison

Company MCap (Rs bn)

CMP (Rs) Reco. TP

(Rs) EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)

FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E FY19E FY20E FY21E HUL 3,605 1,669 NEU 1,709 29.4 35.5 42.7 56.7 47.0 39.1 39.4 33.1 27.9 71.4 73.8 74.4 ITC 3,486 287 BUY 367 10.1 11.1 12.3 28.5 25.9 23.4 17.9 15.9 14.2 37.9 40.1 43.0 GCPL 850 1,248 NR 1,143 26.8 30.8 36.7 46.5 40.5 34.0 35.3 30.2 25.4 20.3 22.9 26.9 Britannia 774 6,450 NEU 6,307 103.2 132.4 158.6 62.5 48.7 40.7 41.9 33.2 27.8 45.7 52.4 56.0 Dabur 657 373 BUY 423 9.4 11.3 13.7 39.7 32.9 27.2 32.8 27.6 23.5 56.8 67.5 77.3 Marico 471 365 BUY 379 8.1 10.4 12.1 45.1 35.1 30.2 32.9 25.9 22.4 45.6 55.7 61.4 Colgate 295 1,085 NEU 1,185 28.7 32.8 37.8 37.7 33.0 28.7 23.1 19.7 17.0 69.6 81.9 96.1 Emami 253 555 BUY 627 14.0 16.6 19.9 39.6 33.4 27.9 29.0 24.6 20.7 27.6 34.0 43.4 Jub. Food 184 1,396 BUY 1,562 25.8 31.8 39.2 54.0 43.9 35.6 28.8 23.9 19.9 56.6 71.9 89.2 Source: HDFC sec Inst Research


Page | 10

Income Statement (Rs mn) FY17 FY18 FY19E FY20E FY21E Net Revenues 39,818 41,880 45,628 50,806 56,508 Growth (%) 2.9 5.2 9.0 11.3 11.2 Material Expenses 14,763 14,901 15,724 17,540 19,171 Employee Expense 2,885 3,059 3,283 3,673 4,085 ASP Expense 5,117 5,268 5,932 6,605 7,346 Distribution Expense 1,424 1,315 1,414 1,575 1,752 Other Expenses 6,185 6,212 6,688 6,833 7,537 EBITDA 9,444 11,124 12,588 14,580 16,617 EBITDA Growth (%) 0.7 17.8 13.2 15.8 14.0 EBITDA Margin (%) 23.7 26.6 27.6 28.7 29.4 Depreciation 1,332 1,565 1,791 2,004 2,218 EBIT 8,112 9,559 10,796 12,576 14,400 Other Income (Inc. EO Items) 403 272 711 558 725 Interest - - - - - PBT 8,514 9,830 11,508 13,134 15,125 Total Tax 2,740 3,097 3,682 4,203 4,840 RPAT 5,774 6,734 7,825 8,931 10,285 Exceptional Gain/(loss) - (97) - - - Adjusted PAT 5,774 6,637 7,825 8,931 10,285 APAT Growth (%) (4.2) 14.9 17.9 14.1 15.2 Adjusted EPS (Rs) 21.2 24.4 28.7 32.8 37.8 EPS Growth (%) (4.2) 14.9 17.9 14.1 15.2


Balance Sheet (Rs mn) FY17 FY18 FY19E FY20E FY21E SOURCES OF FUNDS Share Capital - Equity 272 272 272 272 272 Reserves 12,466 14,974 14,937 18,218 21,516 Total Shareholders’ Funds 12,738 15,246 15,209 18,490 21,788 Long Term Debt - - - - - Short Term Debt - - - - - Total Debt - - - - - Net Deferred Taxes 275 355 355 355 355 Other Non-current Liabilities & Provns 268 209 209 209 209

TOTAL SOURCES OF FUNDS 13,281 15,811 15,774 19,054 22,353 APPLICATION OF FUNDS Net Block 11,081 11,460 11,669 11,664 11,446 CWIP 1,666 1,586 1,586 1,586 1,586 Other Non-current Assets 1,865 1,978 2,158 2,398 2,662 Total Non-current Assets 14,612 15,024 15,412 15,648 15,694 Inventories 2,926 2,267 2,471 2,750 3,057 Debtors 1,299 2,010 1,939 2,159 2,402 Other Current Assets 1,015 1,465 1,611 1,772 1,950 Cash & Equivalents 3,255 4,873 4,909 8,315 12,012 Total Current Assets 8,494 10,615 10,931 14,997 19,421 Creditors 5,975 6,145 6,601 7,238 7,970 Other Current Liabilities & Provns 3,851 3,683 3,968 4,353 4,792 Total Current Liabilities 9,826 9,828 10,569 11,590 12,762 Net Current Assets (1,332) 788 362 3,407 6,659 TOTAL APPLICATION OF FUNDS 13,281 15,811 15,774 19,054 22,353



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Cash Flow Statement (Rs mn) FY17 FY18 FY19E FY20E FY21E Reported PBT 8,514 9,947 11,508 13,134 15,125 Non-operating & EO Items 28 81 - - - Interest Expenses (292) (290) - - - Depreciation 1,332 1,565 1,791 2,004 2,218 Working Capital Change 311 (889) 432 328 409 Tax Paid (3,014) (3,474) (3,682) (4,203) (4,840) OPERATING CASH FLOW ( a ) 6,880 6,939 10,048 11,263 12,911 Capex (3,213) (2,087) (2,000) (2,000) (2,000) Free Cash Flow (FCF) 3,667 4,852 8,048 9,263 10,911 Investments (506) (273) - - - Non-operating Income 297 287 (147) (203) (224) INVESTING CASH FLOW ( b ) (3,421) (2,073) (2,147) (2,203) (2,224) Debt Issuance/(Repaid) - - - - - FCFE 3,458 4,866 7,901 9,060 10,687 Share Capital Issuance - - - - - Dividend (3,271) (3,705) (7,862) (5,650) (6,986) Others (135) (92) (4) (4) (4) FINANCING CASH FLOW ( c ) (3,406) (3,798) (7,866) (5,654) (6,990) NET CASH FLOW (a+b+c) 53 1,068 36 3,406 3,697 EO Items, Others (4) (550) 0 (0) 0 Closing Cash & Equivalents 2,943 4,562 4,597 8,004 11,701


Key Ratios FY17 FY18 FY19E FY20E FY21E PROFITABILITY (%) GPM 62.9 64.4 65.5 65.5 66.1 EBITDA Margin 23.7 26.6 27.6 28.7 29.4 EBIT Margin 20.4 22.8 23.7 24.8 25.5 APAT Margin 14.5 15.8 17.2 17.6 18.2 RoE 50.1 47.4 51.4 53.0 51.1 RoIC (or Core RoCE) 64.5 64.4 69.6 81.9 96.1 RoCE 49.1 46.6 50.7 52.4 50.5 EFFICIENCY Tax Rate (%) 32.2 31.5 32.0 32.0 32.0 Fixed Asset Turnover (x) 2.2 2.1 2.1 2.1 2.2 Inventory (days) 26.8 19.8 19.8 19.8 19.7 Debtors (days) 11.9 17.5 15.5 15.5 15.5 Other Current Assets (days) 9.3 12.8 12.9 12.7 12.6 Payables (days) 54.8 53.6 52.8 52.0 51.5 Other Current Liab & Provns (days) 35.3 32.1 31.7 31.3 31.0 Cash Conversion Cycle (days) (42.0) (35.6) (36.4) (35.3) (34.6) Net D/E (x) (0.3) (0.3) (0.3) (0.4) (0.6) Interest Coverage (x) na na na na na PER SHARE DATA (Rs) EPS 21.2 24.4 28.7 32.8 37.8 CEPS 26.1 30.1 35.3 40.2 45.9 Dividend 10.0 24.0 17.2 21.3 24.6 Book Value 46.8 56.0 55.9 67.9 80.0 VALUATION P/E (x) 51.1 44.5 37.7 33.0 28.7 P/BV (x) 23.2 19.4 19.4 16.0 13.5 EV/EBITDA (x) 30.9 26.1 23.1 19.7 17.0 EV/Revenues (x) 7.3 6.9 6.4 5.6 5.0 OCF/EV (%) 2.4 2.4 3.5 3.9 4.6 FCF/EV (%) 1.2 1.7 2.7 3.2 3.8 FCFE/Mkt Cap (%) 1.2 1.6 2.7 3.1 3.6 Dividend Yield (%) 0.9 2.2 1.6 2.0 2.3



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RECOMMENDATION HISTORY

Rating Definitions BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period SELL : Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Date CMP Reco Target 4-Aug-17 1,083 NEU 1,062 10-Oct-17 1,090 NEU 1,112 13-Nov-17 1,063 NEU 1,110 27-Dec-17 1,082 NEU 1,118 12-Jan-18 1,125 NEU 1,139 6-Feb-18 1,121 NEU 1,163

12-Mar-18 1,038 BUY 1,204 11-Apr-18 1,091 BUY 1,204 21-May-18 1,208 NEU 1,203

9-Jul-18 1,183 NEU 1,219 27-Jul-18 1,085 NEU 1,185

800850900950

1,0001,0501,1001,1501,2001,2501,300

Jul-1

7

Aug-

17

Sep-

17

Oct

-17

Nov-

17

Dec-

17

Jan-

18

Feb-

18

Mar

-18

Apr-

18

May

-18

Jun-

18

Jul-1

8

Colgate TP


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Disclosure: We, Naveen Trivedi, MBA & Siddhant Chhabria, PGDBM, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. 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neutral seeking aggression · 2018. 7. 28. · colgate-palmolive (india) neutral . hdfc securities...

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