23 May 2020 Results Review 4QFY20 Colgate Palmolive - 4QFY20 - HSIE... · 2020-05-23 · Colgate...
Transcript of 23 May 2020 Results Review 4QFY20 Colgate Palmolive - 4QFY20 - HSIE... · 2020-05-23 · Colgate...
23 May 2020 Results Review 4QFY20
Colgate Palmolive
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
Muted Q4, signs of improving execution
Colgate saw a 7% yoy dip in its revenues as lockdown impacted primary sales.
However, co witnessed positive momentum pre-Covid with market share gain
for toothpaste. Most personal care companies/categories struggled in 4Q (HUL
BPC down by 14% yoy, Marico PCNO/VAHO down by 12/18% yoy, GCPL
India business down 18% yoy and Gillette down 13% yoy). We believe oral
care being an essential category will recover quickly and revenue loss due to
channel disruption will be minimal (unlike many FMCG categories). Co’s
new launches are exciting and expect similar aggression in the coming years.
Focus on MT/Ecomm channel will continue to drive its premium portfolio and
market share gain (160/200bps yoy market share gain in MT/Ecomm channel
in 4Q). Co expects to expand its gross margin and is investing behind its
brands. We cut EPS estimates for FY21/FY22 by 3% to factor in subdued
category growth and moderation in premiumisation trend. We value
COLGATE at 38x on Mar-22E EPS, deriving a TP of Rs 1,328. Maintain ADD.
Revenue decline of 7%: Revenue declined by 7% yoy (+6% in 4QFY19 and
+4% in 3QFY20) vs our estimate of flat revenue. Volume declined by 8%
(+5% in 4QFY19 and +2% in 3QFY20). Given loss of sales in last 10 days of
March, we believe volume growth was 2.5-3% pre-Covid (similar to 3Q
trend). New launches like Charcoal clean and PC products like essential oil
shampoos, body washes, etc under Palmolive saw strong traction. Launches
like Naturals toothrushes and new marketing campaign for Vedshakti aided
revenue growth pre-Covid. Co has also launched hand sanitizers in April.
EBITDA margin dip by 234bps yoy: GM was up by 9bps yoy (-57bps in
4QFY19 and +99bps in 3QFY20) to 64.7% (lower than estimates). Employee
expenses were up by 22% while ASP/other expenses saw a decline of 1/10%.
ASP acceleration was missing in FY19 (up 7% yoy) but grew by 15/9% yoy in
9MFY20/FY20. This reflects that management has stepped up aggression wrt
investment behind its brands. EBITDA margin was down by 237bps to
24.5% (-127bps in 4QFY19 and -105bps in 3QFY20). EBITDA declined by
15% (+1% in 4QFY19, flat in 3QFY20). Higher other income (+64% yoy) and
lower taxes led to a 3% growth in PAT to Rs 2.04bn (est Rs 1.99bn).
Call & other takeaways: (1) Co has increased its focus on Ecomm by
constituting a dedicated team to drive growth, (2) Market share gains across
its portfolio in 4QFY20, in March co gained 80bps yoy market share, (3)
Toothpaste category growth in 2019 was at 4% yoy with flat volume. In
4QFY20, growth was 2% yoy with 3% volume dip, (4) Cash & equivalents
are at Rs 4.8bn which is an improvement over Rs 4.2bn in FY19, (5) Co has
repaid its debt which was Rs 777mn in FY19.
Financial Summary
YE Mar (Rs mn) Q4
FY20
Q4
FY19
YoY
(%)
Q3
FY20
QoQ
(%) FY19 FY20P FY21E FY22E
Net Sales 10,713 11,538 (7.1) 11,472 (6.6) 44,624 45,456 47,466 51,171
EBITDA 2,629 3,104 (15.3) 3,161 (16.8) 12,361 12,017 12,949 14,319
APAT 2,042 2,002 2.0 1,991 2.5 7,502 8,165 8,488 9,520
Diluted EPS (Rs) 7.5 7.4 2.0 7.3 2.5 27.6 30.0 31.2 35.0
P/E (x)
47.6 43.8 42.1 37.5
EV / EBITDA (x)
28.6 29.3 27.2 24.3
RoCE (%)
67.2 64.7 63.9 75.2
Source: Company, HSIE Research
ADD
CMP (as on 22 May 2020) Rs 1,313
Target Price Rs 1,328
NIFTY 9,039
KEY
CHANGES OLD NEW
Rating ADD ADD
Price Target Rs 1,372 Rs 1,372
EPS % FY21E FY22E
-3% -3%
KEY STOCK DATA
Bloomberg code CLGT IN
No. of Shares (mn) 272
MCap (Rs bn) / ($ mn) 357/4,708
6m avg traded value (Rs mn) 1,158
52 Week high / low Rs 1,643/1,065
STOCK PERFORMANCE (%)
3M 6M 12M
Absolute (%) (2.2) (12.7) 14.9
Relative (%) 23.3 11.3 36.4
SHAREHOLDING PATTERN (%)
Dec-19 Mar-20
Promoters 51.00 51.00
FIs & Local MFs 10.20 9.96
FPIs 16.49 16.19
Public & Others 22.31 22.85
Pledged Shares 0.00 0.00
Source : BSE
Varun Lohchab
+91-22-6171-7334
Naveen Trivedi
+91-22-6171-7324
Aditya Sane
+91-22-6171-7336
Page | 2
Colgate Palmolive: Results Review 4QFY20
Quarterly Financial Snapshot
Particulars (Rs mn) 4QFY20 4QFY19 YoY
(%) 3QFY20
QoQ
(%) FY20 FY19
YoY
(%)
Net Revenue 10,713 11,538 (7.1) 11,472 (6.6) 44,876 44,624 0.6
Material Expenses 3,786 4,088 (7.4) 3,931 (3.7) 15,729 15,586 0.9
Employee Expenses 899 735 22.3 770 16.7 3,323 2,959 12.3
ASP Expenses 1,555 1,563 (0.5) 1,434 8.4 6,149 5,647 8.9
Other Operating Expenses 1,844 2,048 (9.9) 2,176 (15.3) 7,922 8,072 (1.9)
EBITDA 2,629 3,104 (15.3) 3,161 (16.8) 12,017 12,361 (2.8)
Depreciation 462 394 17.3 515 (10.3) 1,979 1,592 24.4
EBIT 2,167 2,711 (20.1) 2,646 (18.1) 10,038 10,769 (6.8)
Other Income 196 120 64.4 58 238.6 492 377 30.7
PBT 2,363 2,830 (16.5) 2,704 (12.6) 10,530 11,146 (5.5)
Exceptional - (36) na - na - 305 na
PBT after exceptional 2,363 2,794 (15.4) 2,704 (12.6) 10,530 11,451 (8.0)
Tax 302 793 (61.9) 683 (55.8) 2,269 3,670 (38.2)
RPAT 2,042 1,976 3.3 1,991 2.5 8,165 7,756 5.3
Adjustments - 26 na - na - (254) na
APAT 2,042 2,002 2.0 1,991 2.5 8,165 7,502 8.8
EPS (adjusted) 7.5 7.4 2.0 7.3 2.5 30.0 27.6 8.8
Source: Company, HSIE Research
Quarterly Performance Analysis
As a % of Revenue 4QFY20 4QFY19 YoY
(bps) 3QFY20
QoQ
(bps) FY20 FY19
YoY
(bps)
Material Expenses % Net
Sales 35.3 35.4 (9) 34.3 107 35.0 34.9 12
Employee Expenses % Net
Sales 8.4 6.4 202 6.7 168 7.4 6.6 77
ASP Expenses % Net Sales 14.5 13.5 97 12.5 202 13.7 12.7 105
Other Operating Expenses
% Net Sales 17.2 17.7 (53) 19.0 (175) 17.7 18.1 (43)
EBITDA Margin (%) 24.5 26.9 (237) 27.6 (301) 26.8 27.7 (92)
Tax Rate (%) 12.8 28.4 (1,561) 25.3 (1,249) 21.5 32.0 (1,050)
APAT Margin (%) 19.1 17.1 193 17.4 170 18.2 17.4 81
Source: Company, HSIE Research
Revenue declined by 7%
yoy vs our estimate of flat
revenue. Volume declined
by 8%
Employee expenses were up
by 22% while ASP/other
expenses saw a decline of
1/10%.
GM was up by 9bps yoy to
64.7% (in line with our
estimates).
EBITDAM was down by
237bps to 24.5%.
Page | 3
Colgate Palmolive: Results Review 4QFY20
Net Revenue Volume Growth
Source: Company, HSIE Research
Source: Company, HSIE Research
Gross Margin Change EBITDA Margin Change
Source: Company, HSIE Research Source: Company, HSIE Research
Employee Expense Advertising Expense
Source: Company, HSIE Research Source: Company, HSIE Research
(15.0)
(10.0)
(5.0)
-
5.0
10.0
15.0
20.0
25.0
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Net Sales YoY Growth - RHS
(Rs mn) (%)
4
(12)
(3)(5)
(1)
12
4 4
7 7 5 4 4
2
(8)
(15)
(10)
(5)
-
5
10
15
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
(%)
91 76
142 108
41
130
304
255
136
(5)
(110)
(5) (2)
59
9
(210)
(100)
10
120
230
340
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
(bps)
(35)(47)(21)
183 171
286
464 436
51
127
(128)
59
(178)(105)
(237)(300)
(50)
200
450
700
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
(bps)
28
(21)
24
(8) (7)
44
(0)
0
17
4 9
5
27
14
(0)
-
2
4
6
8
10
12
14
16
(30)
-
30
60
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Advertising Gr. (%) Advertising (% of sales) - RHS
(%)
26
(1)
2
(2)
13 15
(1)
3
(7) (5)(3)
11 7 8
22
-
2.0
4.0
6.0
8.0
10.0
(25)
(10)
5
20
35
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Employee Gr. (%) Employee (% of sales) - RHS
(%)
Page | 4
Colgate Palmolive: Results Review 4QFY20
Gross Margin EBITDA Margin
Source: Company, HSIE Research
Source: Company, HSIE Research
Colgate’s Toothpaste Market Share Colgate’s Toothbrush Market Share
Source: Company, HSIE Research
Source: Company, HSIE Research
63
.9
62
.6 63
.4
63
.4
65
.2
65
.7
65
.9
64
.8
65
.1
64
.6
65
.9
64
.7 6
5.7
64
.7
59.0
61.0
63.0
65.0
67.0 3
QF
Y1
7
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
(%)
24
.5
23
.5
22
.7
27
.7
27
.3
28
.2
27
.0
28
.2
28
.6
26
.9
27
.6
26
.4
27
.6
24
.5
10.0
15.0
20.0
25.0
30.0
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
(%)5
5.4
55
.1
54
.3
54
.0
53
.7
53
.4
52
.4
52
.5
52
.2
52
.2
52
.2
52
.2
52
.2 52
.7
50.0
51.0
52.0
53.0
54.0
55.0
56.0
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
(%)
43
.8
45
.8 4
6.8
46
.6
47
.0
47
.4
45
.0 45
.5
45
.1
44
.8
44
.6
44
.2
46
.6
48
.0
41.0
42.0
43.0
44.0
45.0
46.0
47.0
48.0
49.0
3Q
FY
16
4Q
FY
16
1Q
FY
17
2Q
FY
17
3Q
FY
17
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
(%)
Page | 5
Colgate Palmolive: Results Review 4QFY20
Toothpaste Market Share
Toothbrush Market Share
Per Capita Consumption
48.8 49.452.2 53.3 52.7
54.5 56.1 56.8 57.2 55.553.6 52.4
25.1 24.622.8 22.6 23.3 23.5 22.8 21.7
19.8 19.2 17.7 17.3
11.9 12.2 12.9 13.7 14.8 14.0 13.4 13.4 14.0 15.3 15.415.1
0.0 0.1 0.4 0.6 1.2 2.96.8
8.6
0.0
10.0
20.0
30.0
40.0
50.0
60.0
CY07 CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18
Colgate Competitor 1 Competitor 2 Competitor 3
(%)
33.4
38.4 38.235.9
39.841.5 43.0 44.4
47.345.1 45.2
11.4 11.914.8
17.8 18.8 18.4 18.4 17.414.6 14.2 15.2
5.9 6.4 7.2 7.2 6.7 7.5 8.0 9.3 10.7 11.0 9.9
0.0
10.0
20.0
30.0
40.0
50.0
60.0
CY08 CY09 CY10 CY11 CY12 CY13 CY14 CY15 CY16 CY17 CY18
Colgate Competitor 1 Competitor 2(%)
603
458
312
212
158
0
100
200
300
400
500
600
700
Brazil USA Philipines China India
Page | 6
Colgate Palmolive: Results Review 4QFY20
Assumptions
Particulars FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Toothpaste revenue growth 9.0 1.6 3.7 7.4 6.8 1.1 4.3 7.6
Toothpaste volume growth 5.0 4.0 (2.0) 2.5 5.8 0.6 2.8 6.0
GM (%) 63.1 61.8 62.9 64.4 65.1 65.2 65.8 66.3
Employee (% of sales) 6.5 6.8 7.2 7.3 6.6 7.3 7.5 7.4
ASP (% of sales) 17.9 11.6 12.9 12.6 12.7 13.8 13.3 13.3
Distribution (% of sales) 3.5 3.6 3.6 3.1 3.0 3.0 3.0 3.0
Royalty (% of sales) 5.6 5.7 5.2 4.9 4.9 4.9 4.9 4.9
Other expenses (% of sales) 9.0 9.9 10.3 9.9 10.1 9.7 9.8 9.7
EBITDA Margin (%) 20.6 24.3 23.7 26.6 27.7 26.4 27.3 28.0
Tax Rate (%) 28.4 30.4 32.2 31.5 32.1 21.7 25.2 25.2
Source: Company, HSIE Research
Change in Estimates
NEW OLD CHANGE (%)
FY21E FY22E FY21E FY22E FY21E FY22E
Net Sales 47,466 51,171 48,303 52,062 -1.7% -1.7%
EBITDA 12,949 14,319 13,417 14,850 -3.5% -3.6%
APAT 8,488 9,520 8,709 9,835 -2.5% -3.2%
EPS 31.2 35.0 32.0 36.1 -2.5% -3.2%
Peer Set Comparison
Company
Mcap
(Rs
bn)
CMP
(Rs/sh) Reco TP
EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)
FY20E/
CY19P
FY21E/
CY20E
FY22E/
CY21E
FY20E/
CY19P
FY21E/
CY20E
FY22E/
CY21E
FY20E/
CY19P
FY21E/
CY20E
FY22E/
CY21E
FY20E/
CY19P
FY21E/
CY20E
FY22E/
CY21E
HUL 4,308 1,991 REDUCE 1,969 31.7 37.1 41.9 62.8 53.7 47.5 43.0 36.9 32.8 230.7 46.5 28.8
ITC 2,289 187 BUY 221 12.5 11.9 13.0 14.9 15.7 14.4 10.2 10.1 9.0 44.5 43.4 48.0
Nestle 1,564 16,219 REDUCE 14,042 206.0 237.6 278.2 78.7 68.2 58.3 52.3 46.9 41.0 75.0 70.7 69.1
Dabur 761 432 REDUCE 447 9.0 10.0 11.2 48.0 43.1 38.6 38.3 35.5 31.6 51.4 52.7 55.9
Britannia 764 3,180 REDUCE 2,711 56.4 61.9 71.4 56.4 51.4 44.6 41.1 37.0 32.5 41.1 43.4 47.2
GCPL 581 569 REDUCE 529 14.4 15.7 17.6 39.5 36.2 32.3 27.9 27.4 24.9 19.0 18.9 21.4
Marico 408 316 REDUCE 283 8.0 8.4 9.4 39.3 37.4 33.4 27.7 26.4 24.3 41.8 43.2 46.5
United
Spirits 427 588 ADD 586 11.9 13.7 16.1 51.4 43.0 36.5 29.3 26.7 23.3 17.9 19.1 20.8
Colgate 357 1,313 ADD 1,328 30.0 31.2 35.0 43.8 42.1 37.5 29.3 27.2 24.3 64.7 63.9 75.2
Jubilant 214 1,620 REDUCE 1,420 26.8 20.7 35.5 60.4 78.1 45.6 36.2 42.9 27.3 28.4 11.5 21.7
Emami 94 208 REDUCE 221 11.7 11.6 13.0 17.7 17.8 15.9 12.7 12.7 11.3 23.2 24.1 29.9
Radico
Khaitan 41 309 BUY 371 16.1 19.6 23.2 19.1 15.8 13.3 11.6 9.9 8.3 14.9 14.3 15.8
Source: Company, HSIE Research
Page | 7
Colgate Palmolive: Results Review 4QFY20
Financials Consolidated Income Statement
(Rs mn) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Net Revenues 39,819 38,682 39,818 41,880 44,624 45,456 47,466 51,171
Growth (%) 11.3 4.5 2.9 5.2 6.6 1.9 4.4 7.8
Material Expenses 14,677 14,766 14,763 14,901 15,586 15,729 16,032 17,038
Employee Expense 2,589 2,624 2,885 3,059 2,959 3,323 3,487 3,759
ASP Expense 7,142 4,476 5,117 5,268 5,647 6,260 6,313 6,806
Distribution Expense 1,378 1,390 1,424 1,315 1,339 1,364 1,424 1,535
Other Expenses 5,811 6,044 6,185 6,211 6,733 6,764 7,262 7,715
EBITDA 8,222 9,382 9,444 11,125 12,361 12,017 12,949 14,319
EBITDA Growth (%) 23.9 14.1 0.7 17.8 11.1 (2.8) 7.8 10.6
EBITDA Margin (%) 20.6 24.3 23.7 26.6 27.7 26.4 27.3 28.0
Depreciation 750 1,114 1,332 1,565 1,592 1,979 2,089 2,199
EBIT 7,472 8,268 8,112 9,560 10,769 10,038 10,859 12,120
Other Income (Including EO Items) 332 86 403 270 682 492 553 653
Interest - - - - 25 96 70 50
PBT 7,803 8,354 8,514 9,830 11,426 10,434 11,343 12,723
Total Tax 2,214 2,541 2,740 3,097 3,670 2,269 2,855 3,202
RPAT 5,589 5,812 5,774 6,734 7,756 8,165 8,488 9,520
Exceptional Gain/(loss) - (218) - (83) 254 - - -
Adjusted PAT 5,589 6,031 5,774 6,816 7,502 8,165 8,488 9,520
APAT Growth (%) 13.7 7.9 (4.2) 18.0 10.1 8.8 4.0 12.2
Adjusted EPS (Rs) 20.5 22.2 21.2 25.0 27.6 30.0 31.2 35.0
EPS Growth (%) 13.7 7.8 (4.2) 18.0 10.1 8.8 4.0 12.2
Source: Company, HSIE Research
Consolidated Balance Sheet
(Rs mn) FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E
SOURCES OF FUNDS
Share Capital - Equity 136 272 272 272 272 272 272 272
Reserves 7,567 10,038 12,466 14,974 14,196 16,105 15,420 18,952
Total Shareholders Funds 7,703 10,311 12,738 15,246 14,468 16,377 15,692 19,224
Long Term Debt - - - - 777 - - -
Short Term Debt - - - - - - - -
Total Debt - - - - 777 - - -
Net Deferred Taxes 26 400 275 355 309 50 50 50
Other Non-current Liabilities & Provns 859 196 268 209 201 1,520 1,520 1,520
TOTAL SOURCES OF FUNDS 8,588 10,906 13,281 15,811 15,754 17,947 17,263 20,795
APPLICATION OF FUNDS
Net Block 7,816 10,081 11,081 11,460 11,909 11,229 10,639 9,940
CWIP 1,412 784 1,666 1,586 1,987 1,900 1,900 1,900
Other Non-current Assets 372 1,191 1,865 1,978 1,903 2,482 3,163 3,420
Total Non-current Assets 9,599 12,056 14,612 15,024 15,798 15,611 15,703 15,260
Inventories 2,522 2,915 2,926 2,267 2,486 2,969 3,109 3,355
Debtors 696 1,015 1,299 2,010 2,098 1,326 1,384 1,492
Other Current Assets 1,270 951 1,015 1,465 1,611 1,772 1,950 2,145
Cash & Equivalents 2,916 3,198 3,255 4,873 4,271 4,797 4,867 8,973
Total Current Assets 7,405 8,080 8,494 10,615 10,466 10,864 11,309 15,965
Creditors 8,003 5,519 5,975 6,145 6,132 6,125 6,323 6,750
Other Current Liabilities & Provns 413 3,711 3,851 3,683 4,378 2,403 3,427 3,680
Total Current Liabilities 8,415 9,230 9,826 9,828 10,510 8,528 9,749 10,430
Net Current Assets (1,011) (1,150) (1,332) 788 (44) 2,337 1,560 5,534
TOTAL APPLICATION OF FUNDS 8,588 10,906 13,281 15,811 15,754 17,947 17,263 20,795
Source: Company, HSIE Research
Page | 8
Colgate Palmolive: Results Review 4QFY20
Consolidated Cash Flow Year End (March) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Reported PBT 7,804 8,595 8,514 9,947 11,426 10,434 11,343 12,723
Non-operating & EO Items 97 (52) 28 81 - 50 - -
Interest Expenses (264) (246) (292) (290) 25 96 70 50
Depreciation 750 1,114 1,332 1,565 1,592 1,979 2,089 2,199
Working Capital Change 49 155 311 (889) 620 (1,782) 284 92
Tax Paid (2,055) (2,836) (3,014) (3,474) (3,670) (2,269) (2,855) (3,202)
OPERATING CASH FLOW ( a ) 6,382 6,729 6,880 6,939 9,992 8,509 10,931 11,861
Capex (2,994) (2,713) (3,213) (2,087) (2,442) (1,213) (1,500) (1,500)
Free Cash Flow (FCF) 3,387 4,017 3,667 4,852 7,550 7,296 9,431 10,361
Investments - 70 (506) (273) - 125 - -
Non-operating Income 278 42 297 287 (312) (648) (115) (212)
INVESTING CASH FLOW ( b ) (2,716) (2,601) (3,421) (2,073) (2,754) (1,736) (1,615) (1,712)
Debt Issuance/(Repaid) - - - - 777 (777) - -
FCFE 3,665 4,128 3,458 4,866 8,016 5,996 9,316 10,149
Share Capital Issuance - - - - - - - -
Dividend (3,848) (2,987) (3,271) (3,705) (7,862) (5,241) (9,172) (5,988)
Others - (800) (135) (92) (298) (104) (73) (53)
FINANCING CASH FLOW ( c ) (3,848) (3,786) (3,406) (3,798) (7,382) (6,122) (9,246) (6,042)
NET CASH FLOW (a+b+c) (183) 342 53 1,068 (144) 651 70 4,107
EO Items, Others 127 0 (4) (550) 458 (0) 0 1
Closing Cash & Equivalents 2,545 2,887 2,943 4,562 3,960 4,611 4,681 8,787
Key Ratios Year End (March) FY15 FY16 FY17 FY18 FY19 FY20P FY21E FY22E
PROFITABILITY (%)
GPM 63.1 61.8 62.9 64.4 65.1 65.4 66.2 66.7
EBITDA Margin 20.6 24.3 23.7 26.6 27.7 26.4 27.3 28.0
EBIT Margin 18.8 21.4 20.4 22.8 24.1 22.1 22.9 23.7
APAT Margin 14.0 15.6 14.5 16.3 16.8 18.0 17.9 18.6
RoE 81.6 67.0 50.1 48.7 50.5 52.9 52.9 54.5
RoIC (or Core RoCE) 115.8 88.8 64.5 64.4 67.2 64.7 63.9 75.2
RoCE 72.7 63.3 49.1 47.9 48.6 49.0 48.4 50.2
EFFICIENCY
Tax Rate (%) 28.4 30.4 32.2 31.5 32.1 21.7 25.2 25.2
Fixed Asset Turnover (x) 3.1 2.5 2.2 2.1 2.0 1.9 1.9 1.9
Inventory (days) 23.1 27.5 26.8 19.8 20.3 23.8 23.9 23.9
Debtors (days) 6.4 9.6 11.9 17.5 17.2 10.6 10.6 10.6
Other Current Assets (days) 11.6 9.0 9.3 12.8 13.2 14.2 15.0 15.3
Payables (days) 73.4 52.1 54.8 53.6 50.2 49.2 48.6 48.2
Other Current Liab & Provns (days) 3.8 35.0 35.3 32.1 35.8 19.3 26.4 26.2
Cash Conversion Cycle (days) (36.0) (41.0) (42.0) (35.6) (35.3) (19.8) (25.4) (24.5)
Net D/E (x) (0.4) (0.3) (0.3) (0.3) (0.2) (0.3) (0.3) (0.5)
Interest Coverage (x) na na na na na na na na
PER SHARE DATA (Rs)
EPS 20.5 22.2 21.2 25.0 27.6 30.0 31.2 35.0
CEPS 23.3 26.2 26.1 30.8 33.4 37.3 38.9 43.1
Dividend 12.0 10.0 10.0 24.0 16.0 28.0 22.0 24.0
Book Value 28.3 37.9 46.8 56.0 53.2 60.2 57.6 70.6
VALUATION
P/E (x) 63.9 59.3 61.9 52.4 47.6 43.8 42.1 37.5
P/BV (x) 46.4 34.7 28.1 23.4 24.7 21.8 22.8 18.6
EV/EBITDA (x) 43.1 37.8 37.5 31.7 28.6 29.3 27.2 24.3
EV/Revenues (x) 8.9 9.2 8.9 8.4 7.9 7.8 7.4 6.8
OCF/EV (%) 1.8 1.9 1.9 2.0 2.8 2.4 3.1 3.4
FCF/EV (%) 1.0 1.2 1.0 1.4 2.0 1.9 2.6 2.9
FCFE/Mkt Cap (%) 1.0 1.2 1.0 1.4 2.2 1.7 2.6 2.8
Dividend Yield (%) 0.9 0.8 0.8 1.8 1.2 2.1 1.7 1.8
Source: Company, HSIE Research
Page | 9
Colgate Palmolive: Results Review 4QFY20
Rating Criteria
BUY: >+15% return potential
ADD: +5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL: >10% Downside return potential
Date CMP Reco Target
28-May-19 1,180 NEU 1,227
9-Jul-19 1,164 NEU 1,231
18-Jul-19 1,203 NEU 1,281
22-Sep-19 1,397 NEU 1,412
11-Oct-19 1,497 NEU 1,398
25-Oct-19 1,565 NEU 1,400
9-Jan-20 1,459 NEU 1,433
31-Jan-20 1,396 NEU 1,392
2-Mar-20 1,285 ADD 1,497
13-Apr-20 1,365 ADD 1,372
14-Apr-20 1,354 ADD 1,372
22-May-20 1,313 ADD 1,328
From 2nd March 2020, we have moved to new rating system
RECOMMENDATION HISTORY
1,000
1,100
1,200
1,300
1,400
1,500
1,600
Ma
y-1
9
Jun
-19
Jul-
19
Au
g-1
9
Sep
-19
Oct
-19
No
v-1
9
Dec
-19
Jan
-20
Feb
-20
Ma
r-2
0
Ap
r-2
0
Ma
y-2
0
Colgate TP
Page | 10
Colgate Palmolive: Results Review 4QFY20
HDFC securities
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