Colgate-Palmolive hits over 17-month low

Thus far in 2016, the stock is down 17% as compared to 6% decline in the S&P BSE Sensex

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Shares of Colgate-Palmolive (India) have hit over 17-month low of Rs 801, down nearly 3% on the BSE at 11:51 am. The stock is trading at its lowest level since September 17, 2014.

Thus far in 2016, the stock has underperformed the market, by falling 17% as compared to 6% decline in the S&P BSE Sensex. Post October-December 2015 (Q3FY16) results, the stock is down 7% against 1.4% fall in the benchmark index.

Colgate’s Q3FY16 revenues grew by a mere 1.9% year on year to Rs 1,006 crore. Impacted by the toothpaste category slowdown and rising competition, Colgate’s volume growth cracked to around 1% during the quarter, the lowest recorded by the company in the past 10 years.

With a mere around 1% volume growth in the domestic market, analyst at HDFC Securities is skeptical about the company’s claim of market share gain.

“We believe the industry will face stiff competition from new entrants, such as Patanjali, which can have a sizable impact on Colgate, Hindustan Unilever and Dabur’s oral care portfolio,” analyst said in a results preview.

Analyst at Elara Securities believes the shift of consumer preference towards ethnic/ herbal toothpastes brings high risk to Colgate’s volume growth rates going forward.

With Patanjali ramping up its distribution in general trade from a mere 5% penetration of this channel currently, Colgate may face the heat over the coming years, added report.