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Systematix Research Report
Colgate-Palmolive India Ltd.’s Q2 FY22 results were below consensus and our estimates.
Revenue grew 5.2% YoY on a low base, resulting in a two-year revenue compound annual growth rate of 5.3% (a sequential improvement from 3.7% in Q1 FY22).
We estimate toothpaste volume growth of ~2% YoY in Q2 FY22 (on a base of 3% YoY).
Ebitda margin was 29.6% versus our estimate of 30% due to gross margin contraction of 130 basis points YoY and higher advertisement and promotion spend (up 90 bps YoY to 13.7% of sales).
Ebitda/adjusted profit after tax declined 2.1%/1.8% YoY, respectively.
Colgate India’s strategy of driving brand penetration through marketing spend, focus on new product innovation and strengthening go-to-market across e-commerce, modern trade and wholesale channels are efforts in the right direction.
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