“Colgate’s volume grew a mere 4 per cent in the past 12 quarters, due to intense competition in the oral care industry. The nationwide launch of Colgate Swarna Vedshakti in FY19 is gaining significant traction. Moreover, with corrective action in the natural portfolio, we remain optimistic about the volume share regain,” analysts at Dolat Capital said in annual report analysis.
Going ahead, aggressive marketing, high ad spends, launch of more variants, price hikes, and expansion of distribution reach would help increase market share. The company’s EBITDA margins to sustain around 27 per cent, due to modest input cost environment, measured price hikes, and continued cost rationalization measures, it added.
Analysts at Prabhudas Lilladher, however, believe that given Colgate's weak positioning in high growth naturals segment and intense competition from Dabur, Patanjali and other players in the naturals segment, its intent to achieve 6-7 per cent volume growth looks difficult.
"It will have to lead industry growth and gain share in order to sustain volume growth in mid to high single digits, as it has close to 50 per cent share of the market," they wrote in a company update.
JP Morgan has ‘overweight’ rating on Colgate Palmolive with June 2020 target price of Rs 1,350 per share as the brokerage firm believes the worst is behind the company and that gradual improvement in volume/market share would drive a stock re-rating.
At 10:55 am, the stock was trading 5 per cent higher at Rs 1,316 on the BSE, as against a 0.52 per cent decline in the benchmark index. A combined 1.04 million shares have changed hands on the counter on the BSE and NSE so far.