Colgate Palmolive - India Smiling

Stock Opportunities Not-so-Hidden Gems
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The company has received a Transfer Pricing Order from the Income Tax Authority for the Assessment Year 2021-22.

They have received a Transfer Pricing Order from the Income Tax Authority for the Assessment Year 2021-22. This order pertains to international transactions and disallows certain aspects, with an associated income tax liability of INR 170 Crores. The company has stated that this order has no quantifiable impact on its financial, operational, or other activities, and they are awaiting the completion of Draft Assessment proceedings before making an application to the Dispute Resolution Panel.

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Colgate Palmolive Inda has been decreasing the number of manpower across India. They are reducing the number of their sales staff and giving more area to the same staffs. They are facing some challenges in achieving their monthly targets across. Also, I heard only two branch managers are operatng instead of four.

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Colgate Palmolive -

Q4 and FY 25 results and concall highlights -

Q4 outcomes -

Revenues - 1463 vs 1490 cr, down 2 pc ( volumes in Q4 were flat YoY )
Gross margins @ 70.4 vs 69.1 pc
EBITDA - 498 vs 532 cr ( margins @ 34 vs 36 pc )
Brand investments - 176 cr @ 12.4 pc of sales
PAT - 355 vs 380 cr, down 7 pc

FY 25 outcomes -

Revenues - 6040 vs 5680 cr ( toothpaste volumes grew in mid single digits )
Gross margins @ 69.7 vs 69.5 pc
EBITDA - 1958 vs 1901 cr ( margins @ 32 vs 33 pc )
Brand investments - 822 cr @ 13.7 pc of sales
PAT - 1437 vs 1324 cr

Pillars for future growth -

Premiumisation
Focus on growing Toothbrushes and Devices
Building personal care portfolio

Colgate Purple ( a whitening toothpaste ) and Colgate Lemonfresh are doing exceedingly well ( both are recent product innovations )

Colgate is the most advertised FMCG brand in India

In India, ppl change 1.2 toothbrushes / yr vs a global avg of 4 changes - indicating significant under penetration

Poor / Sluggish demand trends continue in Urban India ( except for the premium portfolio ). Rural India continued to show descent demand uptick

Relaunched Colgate Strong teeth in Q4 ( mostly a rural focussed brand ) - seeing good customer acceptance

Colgate Max Fresh continues to be their fastest growing brand

76 pc of all tooth brushes sold in India are priced below Rs 40. This also offers significant room for premiumisation

Have launched a range of new products in the body wash + hand wash category under the Palmolive brand. Company has a big product / brand portfolio of choose from their parent’s global operations. Only a matter of time before they start launching them in India ( brands like - Protex, Meridol, Sanex, Axion, Soupline etc )

FY 25 witnesses modest cost inflation. Healthy margins in FY 25 were mostly driven by cost savings as the company did not resort to any price hikes

Have launched Whitening Pen in India in FY 25 ( in consultation with doctors / dentists )

Company believes they have an opportunity to build a full portfolio addressing the therapeutic area of the mkt ( addressing gum health / sensitivity issues / other dental problems )

Company is over indexed on rural India - which is a good thing ( as rural growth rates are holding up ). Once the lower half of Urban consumption picks up, company should be back to good shape again

Disc: initiated a tracking position, its a trading bet ( because of recent fall in stock price ), not SEBI registered, not a buy/sell recommendation

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