FMCG behemoth Colgate-Palmolive India Limited has posted a 12.4% rise in net profit for the Q2 FY 2021 at Rs 274.2-crore as against Rs 244-crore in the corresponding quarter of previous year. The company's revenue scaled up by 5.3% to Rs 1,286-crore from Rs 1,221.8-crore, on year-on-year bass. Net sales in India for the quarter reported 7.1% growth. Earnings before interest, tax, depreciation and amortisation (EBITDA) in the second quarter FY21 climbed up 26.6 percent to Rs 409-crore from Rs 323-crore, whereas margin expanded by 540 base points to 31.8 percent versus 26.4 percent the corresponding period last year.
According to brokerage form CLSA’s version: it states that Colgate-Palmolive reported a better-than-expected second quarter operational performance, where top-line growth at 5 percent Year-on-year was in-line, while EBITDA margin expansion of 540 bps year on year to quarterly peak of 32 percent was better than our expectation. Other brokerage firm Jefferies says that Colgate's GM & EBITDA margins advanced to all-time highs, contributing most to the second quarter FY21 earnings performance. Domestic revenue grew 7 percent Year on year which was also positive. Motilal Oswal maintains a buy call on Colgate stocks given that the nature of the category offers less uncertainty currently. It has a best-of-breed balance sheet, valuations are moderate at 38x FY22E EPS, close to its ten-year average, and there is a spark of an incipient market share recovery under the new Managing Director.
The brokerage firm ICICI Securities believes Colgate benefited from a largely ‘essential’ portfolio, presence across the price-benefit pyramid which help capture any impact of down-trading and strong distribution reach, especially in rural India which was relatively less impacted.
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