Colgate-Palmolive Rating- Neutral - Scaling up personal care business
时间:2024-06-29 03:59:54 阅读(143)
By Nomura Research
Tothpaste major Colgate Palmolive’s new MD & CEO Prabha Narasimhan presented her roadmap in her first interaction with analysts showcasing a new thrust in the company’s strategy. The key focus areas were : (i) driving category volume growth through improvement in penetration/per capital spending on oral care; (ii) innovative science-backed value-added launches driving premiumisation; (iii) scaling up personal care business; and (iv) ramping up digitalisation investments.
Also Read: Colgate needs aggression under new CEO to grow
The toothpaste category has been witnessing lower volume growth over the past couple of years and slower adoption of premium products even though 55% of rural households do not brush daily and two-thirds of the market is just above the entry-level price point. While CLGT been driving share gains in e-com, gains in general trade and the objective of moving to an overall higher growth trajectory have be constrained by moderate category growth—a function of not enough category development despite high penetration. Recent premium innovations are tracking well, albeit they are still small contributors to overall revenue. The guardrails laid down by the new CEO are promising and have the potential to improve volume growth and market share for the company; however, we believe execution will be key. We reiterate our Neutral rating and TP of Rs 1,600, with a 6% EPS CAGR over FY22-25F.
CLGT’s four pillar growth strategyLead toothpaste category growth:The volume growth has been tepid for the industry, with underspending on oral care wheras in Brazil/ Philippines per capita consumption is 3.1x/1.8x higher than India. The lack of consumer awareness on benefits of oral care has been a barrier for the industry to grow. The other reason is inculcating twice-a-day brushing habit and increasing per capita toothpaste consumption which are long-term levers to drive category growth. Continued focus on protective care along with entry into newer growth categories (oral beauty) will aid Colagate grow ahead of the market.
Also Read: Colgate-Palmolive India rating: Hold | Topline remains the primary concern
The company’s focus on value-added science-backed launches and forays into niche segments such as oral beauty care, diabetic toothpaste, kids toothpaste, etc have been fundamental to the company. It continues to contemporise its core portfolio with stronger value-added formulations at attractive price points. Around two-thirds of domestic market consumes toothpastes priced under Rs 100 per unit, and CLGT has launched trial packs at affordable price points to encourage consumers to try out newer launches, thereby driving premiumisation.
Leads category growth in toothbrush and devices:The focus remains on driving volume growth in toothbrushes (ideal replacement demand is three months, but replacement demand is 6/15 months) through value-added products such as Colgate Super Flexi and Colgate Ultra Flexi. The company has been driving premiumisation through innovative launches such as the Gentle range , electric toothbrushes and niche products.
Build personal care:CLGT is scaling-up of brand Palmolive into adjacent categories. The focus is on hand wash, body wash and face care. It will launch new products in a calibrated manner in due course.
上一篇:Patanjali eyes 5 IPOs in 5 years
下一篇:Zaggle Prepaid makes muted market debut; shares settle over 3 per cent lower
猜你喜欢
- Rupee likely to depreciate amid weak dollar, easing crude prices; USDINR pair to trade sideways in this range
- Rupee likely to depreciate on strong dollar, risk aversion in markets; UDINR pair to trade in this range
- Reliance Power offers Rs 1,200 cr to settle debt of Butibori power project
- Paytm plunges 9% intra-day as Ant Financial sells stake
- Rupee falls over 11 pc in 2022 – worst since 2013
- Retail trends to keep and ditch in 2024
- Rupee falls 24 paise to close at 82
- Rupee likely to depreciate on strong dollar, elevated crude prices; USDINR to trade with positive bias
- Petrol and diesel price April 20- Fuel cost remains unchanged; Check prices in Delhi, Mumbai here