Colgate-Palmolive - Margins Set To Reach New Highs: Systematix

Sustained pick-up in growth trajectory required for further re-rating.

<div class="paragraphs"><p>A Colgate toothpaste. (Photo: Usha Kunji/ Source: BQ Prime)</p></div>
A Colgate toothpaste. (Photo: Usha Kunji/ Source: BQ Prime)

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Systematix Research Report

We attended Colgate-Palmolive India Ltd.’s analyst meet to gain more insights on the current state of business and progress on key growth pillars. The core focus areas remain the same –

  1. driving usage-led volume growth in rural markets,

  2. driving premiumisation in urban markets (from 14% to 25%),

  3. research and development expertise and support from parent company to drive product superiority,

  4. scaling up the personal care portfolio with a focus on body wash category,

  5. use of artificial intelligence and technology to improve distribution and supply chain and

  6. drive faster replacement and premiumization in toothbrush segment.

Colgate has started witnessing a volume recovery in both urban and rural markets with a category turnaround supported by internal initiatives like superior products, improved communication and digitization.

Margin expansion is being led by pricing actions, continued premiumisation and softening of raw material inflation. We believe gross margins can improve further, which would support Colgate’s innovation, premiumisation and category expansion initiatives.

However, operating margins can see some fluctuations moving ahead led by increasing investments behind brands.

On distribution front, Colgate has witnessed a growth of 30% in distribution points in Q1 FY24 versus FY21 led by efficient use of technology.

Click on the attachment to read the full report:

Systematix Colgate-Palmolive - Company Update.pdf
Colgate-Palmolive's Premium Push To Playout In Long-Term Only: Prabhudas Lilladher


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