(Reuters) – Colgate Palmolive (India) reported a third-quarter profit that came in below market estimates on Tuesday, hurt by dwindling demand from urban consumers and higher expenses.
The toothpaste maker’s net profit fell 2.2% to 3.23 billion rupees ($37.3 million) in the quarter ended Dec. 31, missing analysts’ average estimate of 3.33 billion rupees, according to data compiled by LSEG.
Revenue from operations rose 4.7% to 14.52 billion rupees. However, the company’s total expenses surged by 8.2%, offsetting the sales growth.
KEY CONTEXT
Colgate’s volume growth in the toothpaste category is slowing down in urban areas, while acceleration of growth in the rural segment is tapering off, analysts have said.
As a result, it has amped up marketing and promotional spend to increase sales and drive market share in a country where only 50% of rural customers brush every day, the company has said. This has kept margins range-bound, according to analysts.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean # of Stock to Div yield
growth (%) growth rating* analysts price (%)
(%) target**
Colgate-Palmolive 46.08 32.26 9.10 11.39 Hold 28 0.89 1.82
(India) Ltd
Hindustan Unilever 49.03 34.09 6.60 8.14 Buy 19 0.91 1.82
Ltd
Dabur India Ltd 43.50 33.44 8.75 12.08 Buy 38 0.87 1.05
Godrej Consumer 46.03 33.22 8.91 20.71 Buy 33 0.84 1.77
Products Ltd
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER TO DECEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 86.5290 rupees
(Reporting by Ananta Agarwal in Bengaluru; Editing by Savio D’Souza)
