Shares of Colgate-Palmolive (India) Ltd. declined as the company's plans to regain lost market share failed to cheer analysts.
The newly appointed Chief Executive Officer, Prabha Narasimhan, mapped out plans to focus on four key areas to win back lost market shares and restore growth that was seen two to three years ago.
"While initiatives for growth under the new chief executive officer are welcome, we do not see any material change in business prospects over the near to medium term," Motilal Oswal said in its investor note.
Nomura, while marking the new plans laid down by the CEO as "promising" with potential to improve both volume growth and market share, said execution will be key.
The shares of the company fell 4.39% intraday before closing 4.3% lower at Rs 1,571.5 apiece. The benchmark Nifty 50 ended 0.28% higher.
The total traded volume stood at 3.3 times the 30-day average. The relative strength index stood at 42.5.
Of the 35 analysts tracking the stock, nine analysts maintain a 'buy,' 16 recommend a 'hold,' and 10 suggest a 'sell', according to Bloomberg data. The average 12-month consensus price target implies an upside of 3%.
Here's what analysts had to say:
Motilal Oswal
Reiterates 'neutral' rating on the stock with a target price of Rs 1,620 per share.
Growth likely to sustain going forward with weak revenue and earnings.
There is unlikely to be any re-rating of the stock.
Earnings per share CAGR of about 5.5% over the next two years implies a tepid outlook with volumes declining on YTD basis this year.
Do not see any material change in business prospects over the near to medium term.
Jefferies
Maintains 'buy' rating on the stock with price target Rs 1,850, with potential upside of 12%.
Believes Colgate needs aggression, which requires parent's buy-in.
Slightly below consensus on FY23-24 earnings.
Topline acceleration is key for stock performance.
Volume growth acceleration aided by rural growth or market share gains in toothpaste category is upside catalyst.
Continued loss of market share in the toothpaste category led by intense competition, lack of pricing power and downtrading by consumers and sharp increase in input costs are the downside catalysts.
Nomura
Maintains 'neutral' with a target price of Rs 1,600.
Recent premium innovations are tracking well, albeit still small contributors to overall revenue.
Expects 6% EPS CAGR over FY22-25.
Strong or weak demand for new products would be the key upside or downside risks.
The brokerage likes:
The new CEO's emphasis on new launches and festive uses for oral beauty.
Bringing artificial intelligence technology and digital through 'Amazing' application.
D2C site to drive high-end products.
Dentist first programme.
Premiumisation and market segmentation with new launches.
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