Best to stay invested COLGATE PALMOLIVE INDIA

Market leader in toothpastes, Colgate has posted a good performance for the first quarter ended 30th June 2008. YoY, the company recorded a 16% growth in net sales at Rs.407.60 crore. Higher volumes helped the improvement in the sales realisations. Volumes of its toothpaste sales rose 11.5% which was marginally higher than the industry growth rate of 11%.

Operating expenses were up 18% of this, 20% was its advertising and sales promotion expenses. Though it managed to reduce its costs on raw materials, its employee costs have also gone up. EBIDTA was up 19.46% at Rs.97.27 crore. OPM was up at 23.86% from 18.39% in Q1FY08.

Maintaining its depreciation and interest outgo at more or less the same levels, the PBT of the company was up 19.12% at Rs.91.34 crore. The PAT was up 18.13% at Rs.71.92 crore. This meant that there was a substantial improvement in the NPM, which rose from 14.21% in Q1FY08 to 17.64%.

The company today commands a market share of 48%. In the toothpowder segment, the company's share is about 46%. Toothbrush category witnessed a volume growth of 32% in the current quarter, increasing its market share to 37.2% for the Jan – May 2008 period. The fact that it is an established brand and toothpastes and tooth powders being a habit, and also given the lower penetration levels of its products in rural India, the growth rate for the company continues to look good. Also, any raw material costs rise, the company would be able to effectively pass it on to the consumers.

Best to stay invested