Colgate-Palmolive dips 6% on disappointing Q3 nos; volume growth slips QoQ

Shares of Colgate-Palmolive (India) dipped 6 per cent to Rs 1,392 on the BSE on Thursday after the company reported a disappointing volume growth of 2.3 per cent in the December quarter of FY20 (Q3FY20). The personal-care products' selling firm had posted an underlying volume growth of 4 per cent in the September quarter.

The stock was trading at its lowest level since September 20, 2019. With today’s fall, it has fallen 15 per cent from its 52-week high level of Rs 1,641, touched on November 8 last year.

The management said the current quarter continued to witness demand moderation and soft consumer sentiments.

Meanwhile, the company reported a net sales growth of 4.1 per cent year-on-year (YoY) at Rs 1,136 crore in Q3FY20, despite the category seeing headwinds in both rural and urban segment. Net profit after tax for the quarter grew 3.6 per cent to Rs 199 crore, as against a profit of Rs 192 crore in the year-ago quarter. Earnings before interest, tax, depreciation and amortization (Ebitda) margin declined 105 basis points to 27.55 per cent due to higher Ad-spend.

Brokerage firm Antique Stock Broking had expected Colgate to continue to witness low single digit volume growth in Q3FY20 due to muted growth in its largest brand, Colgate Dental cream (CDC).

“With the introduction of naturals by Patanjali, Colgate Palmolive lost its market share to Patanjali, primarily in South and West India. Colgate’s market share of around 57 per cent (at an all-time high) in 2015 is down to around 52 per cent currently. However, with growth moderation in naturals, market share for Patanjali is not increasing and is stable at around 8 per cent. Even for Colgate, market share has stabilized (its internal assessment on market share),” analyst at Elara Capital had said in November company update report.