Colgate stock rallies 7% on open-offer buzz

The stock of Colgate-Palmolive India rallied almost seven per cent today amid rumours that the US parent, which controls 51 per cent of the Indian subsidiary, may make an open offer for the balance equity to be able to later delist the company.

The stock, according to data available with the Bombay Stock Exchange (BSE), moved up in the last half-hour of trade, touching an all-time high of Rs 811.3. It finally settled at Rs 800.6 at the end of trade.

Though the sudden rally surprised most market observers, analysts say speculation about a possible open offer by the New York Stock Exchange-listed Colgate-Palmolive Company has been there for a while. Barring India, the company is not listed anywhere else in the world outside the US, they say. This could be a key factor for a possible open offer.

Colgate-Palmolive declined to comment, saying it does not speak on market speculation.

At a time when the Indian subsidiary is doing well, the US parent, analysts say, wants full control to partake of its growth. Colgate-Palmolive India reported 48 per cent growth in net profit for the quarter ended March 31. It was Rs 114.4 crore in the fourth quarter vis-a-vis Rs 77.1 crore last year. Net sales, in contrast, moved up 13 per cent to touch Rs 516.6 crore, versus Rs 455.46 crore last year.

The increase in sales for the quarter was led by strong volume growth of 11 per cent in the core toothpaste category, the company said, while announcing its results last week. This pushed up Colgate’s overall toothpaste share to 53.4 per cent in the fourth quarter as against 51.7 per cent last year. Contributors to growth in the segment included flagship brands Colgate Dental Cream, Active Salt and Cibaca, with new products like Colgate Sensitivity.

In the toothbrush category, Colgate’s share increase was even sharper, touching 41.2 per cent in the fourth quarter as against 37.8 per cent a year before. In the toothpowder segment, however, Colgate’s share was down to 48.3 per cent from 49.2 per cent a year before, it said.