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Colgate Palmolive shares fall 2% as investors book profit after healthy Q4

Colgate Palmolive Q4 results: despite a sharp ramp up of ad spends (up 18 per cent Y-o-Y), Ebitda margins expanded by 226bp Y-o-Y/216bp Q-o-Q to stand at 35.7 per cent

Colgate Palmolive shares fall 2% as investors book profit after healthy Q4

SI Reporter New Delhi

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Shares of Colgate Palmolive fell 1.7 per cent to Rs 2,768 apiece on the BSE on Wednesday as investors booked profit in the fast moving consumer goods (FMCG) company post its March quarter (Q4) results for financial year 2023-24 (FY24).

At 11:00 AM, the stock was quoting 1.36 per cent lower at Rs 2,780 per share as against an unchanged benchmark S&P BSE Sensex index.

During the recently concluded quarter, Colgate Palmolive India saw its net profit rise 20.1 per cent year-on-year (Y-o-Y) to Rs 379.8 crore, led by higher sales due to a continued revival in rural demand and an increase in margins.

That apart, the oral care major reported a 10.4 per cent Y-o-Y rise in its revenue to Rs 1,480.7 crore in Q4, while its profit before interest, depreciation and tax was up 17.5 per cent Y-o-Y at Rs 554.8 crore during the quarter.

Domestic sales grew by 10.7 per cent for the quarter, on the back of strong performance in toothpaste. Besides, the rural market displayed positive signs of demand recovery, outperforming urban markets. The company's gross margins expanded 244bps Y-o-Y, but contracted 287bp Q-o-Q to stand at 69.3 per cent.

Moreover, despite a sharp ramp up of ad spends (up 18 per cent Y-o-Y), Ebitda margins expanded by 226bp Y-o-Y/216bp Q-o-Q to stand at 35.7 per cent.

"Margins remained strong in line with various cost initiatives such as 'Funding The Growth' program. It has also entered into an innovative communication tie up with IPL with renewed focus on Brushing at Night. Rural sales outpaced urban. It is performing well in Modern Trade and E-commerce." analysts at Nuvama Institutional Equities noted in a post result update.

Highlighting its various initiatives, the management said it relaunched Colgate Active Salt with a stronger formula and introduced a more affordable 80g pack for its leading toothpaste, Colgate Total. It also launched new fragrances for Palmolive body wash along with its first mass media campaign. Colgate Palmolive India also has a robust innovation pipeline, starting with a first of its kind Tooth Whitening Booster under the Visible White Range.

"With a focus on premiumisation and pricing power,Colgate is well-positioned to capitalise on this momentum and maintain its growth. It sparks growth with a steady stream of innovations and
strategic moves," analysts at Nuvama added, who maintained their 'Buy' rating on the stock.

The brokerage's target price on Colgate Palmolive stock, which currently stands at Rs 2,910, may be revised post the company's analysts' call, scheduled for today.

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First Published: May 15 2024 | 11:21 AM IST

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