The oral care segment will likely remain a profitable but a competitive segment over the next 3-5 years, says Nomura Equity Research
Colgate Palmolive (India) is the dominant market leader in the oral care segment in India. Category growth is still attractive and profitable, and it is expected that the company holds its market share and deliver stable earnings growth over the next couple of years, says Nomura Equity Research in its report on Colgate Palmolive.
According to Nomura analysts, “While we expect Colgate Palmolive to continue to deliver stable earnings growth, we believe current valuations build in a significant premium versus the long-term average.”
Positive catalysts for the share could come if the company is able to gain significant a market share in the toothpaste segment. The oral care segment will likely remain profitable but a competitive segment over the next 3-5 years. Downside risk could come from disruptive competition from other players, which could force Colgate Palmolive to increase its A&P (advertising and promotion) spend. However, the company has already demonstrated its ability to face heightened competition, and Nomura is confident about the company’s ability to maintain this over the medium term.
The strong market share performance has not been at the expense of margins. Although Colgate Palmolive spends a significant level of money on A&P, over the past five years it has only grown in line with the sales CAGR (compounded annual growth rate). This has been the most impressive growth recorded by the company, and has surprised positively.
Colgate Palmolive trades at 25.6x FY15F EPS (earnings per share). The stable and attractive nature of the business has already been captured in the current premium valuation versus the sector. Nomura has upgraded the stock to Neutral, but it believes that valuations leave only limited upside potential from current levels.
Over the past year, Colgate Palmolive has seen a significant re-rating, partly driven by the open offer made by GlaxoSmithKline Plc for its listed Indian subsidiary GlaxoSmithKline Consumer Healthcare for which the parent increased its stake from 43.16% to 72.46%. Colgate Palmolive’s current valuation may be building in the possibility of a similar open offer from parent company Colgate. However, Nomura analysts consider such an offer unlikely.
A CBI probe revealed several irregularities in the allotment of a coal block to Jharkhand Ispat Private Limited, for its sponge iron plant
The Central Bureau of Investigation (CBI) on Monday carried out searches in five cities after registering a new case against Jharkhand Ispat Private Limited for alleged irregularities in the allotment of coal blocks.
CBI sources said that Jharkhand Ispat Private Limited, a company of the RC Rungta Group, was allotted North Dhadu coal block on 13 January 2006 for its sponge iron plant.
They said the agency detected several irregularities in the allotment after which a case was filed against it and unknown public officials.
The sources said details of the FIR could not be revealed as searches were still going on at Varanasi, Hazaribagh, Kolkata, Ranchi and Delhi.
The CBI has so far registered 10 FIRs, including this one, in connection with the coal scam.
The agency had earlier also booked some companies for alleged cheating, forgery and misrepresentation of facts in their applications for coal blocks.
In one representative case it was revealed how officers from the MCD kept pushing papers from one desk to another for over three years without any productive work. This is the 53rd in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application