Dolat Capital: Colgate Palmolive’s Toothpaste Gains Traction In Q1; But Rich Valuations Is A Key Concern
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Dolat Capital Report
Colgate Palmolive India Ltd.’s Q1 FY21 results were ahead of our expectation on all parameters. The company posted 7% volume de-growth during Q1.
While toothpaste reported mere 3% volume de-growth, a higher decline in toothbrush portfolio impacted overall volume performance.
Advertisement and promotion (A&P) spends reduced significantly, in line with lower spends of the peers. We believe that the A&P spends would remain low in the ensuing quarters due to consumer upstocking.
Going ahead, government efforts to increase farmer’s wages and focus on rural infrastructure should boost oral care category. However, increase in competition and better product offerings by competitors like Dabur India Ltd. remains a key challenge for Colgate.
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