FMCG

Colgate-Palmolive(India) Ltd. – Shining Bright in the FMCG Market

90% of households in India have Colgate-Palmolive products, and 1.7 million stores in India sell Colgate-Palmolive products every quarter.

(A) About

Colgate - Logo

Colgate-Palmolive (India) Ltd is the fastest growing as well as one of the oldest companies catering to personal care products. Meanwhile, The product range of the company can be broadly classified into Oral care-Under this segment the company offers products like toothpaste, toothbrushes, tooth powder & tooth whitening products, Personal care -In this segment, it offer products skin care, hair care and body wash.

Also, The company has launched a new line of products for Dentists - under which it provides products like Colgate Sensitive treatment and tooth Whitening.

(B) Journey of Colgate-Palmolive(India)

(C) Board of Directors of Colgate-Palmolive(India)

(D) Shareholding Pattern

colgate-palmolive _Shareholding_PAWealth
colgate-palmolive _Shareholding_PAWealth

(E) Product Segments

colgate-palmolive _products_PAWealth

Colgate's oral care portfolio includes toothpastes like MaxFresh and Total, along with other specialized products like PerioGard and toothbrushes. Additionally, they cater to personal care needs with body wash and other offerings.

(F) Revenue Segment

(G) Cost Structure

colgate-palmolive _coststructure_PAWealth

(H) Financials of Colgate-Palmolive(India)

colgate-palmolive _financials_PAWealth

The company's revenue has grown at a CAGR of 4.3% over the past 10 years from Rs 3578.81 Cr. in FY14 to Rs 5226.2 Cr. in FY23, while its PAT has grown from Rs 41 Cr. in FY19 to Rs 384 Cr. in FY23. However, The company's ROE has decreased from 90% in FY14 to 61.01% in FY23.

colgate-palmolive _dupont_PAWealth

(I) Management Discussion & Concall Highlights

  • The company will concentrate on volume growth by emphasizing its key brands like as Colgate Strong Teeth, Max Fresh, and lastly, Colgate Acitve Salt.
  • Premiumization as well as lobbying for better oral health care would provide growth opportunity for the company. While, Palmolive the company's personal care brand has 67% brand awareness in the body wash and hand wash category.
  • The company is seeing strong growth in the oral care category, with Q1 numbers up to 12%. This is due in part to a comparative period advantage, as Q1 of last year was a soft quarter. The company also attributes some of this growth to its focus on innovation and product launches.
  • Meanwhile, the company does not believe that ayurvedic toothpaste is a viable long-term strategy. Also, The company believes that consumers are buying benefits, not ayurveda, and that these benefits can be delivered through other technological platforms.
  • Only 20% of urban households brush twice a day whereas 55% rural households do not brush daily, which provides an opportunity for growth for the company through oral health awareness.
  • India's per capita toothpaste consumption is low compared to other countries in the region, such as the Philippines (1.8x) and Brazil (3x). Also, This indicates a significant opportunity for growth in the Indian toothpaste market.
  • The company is focusing on improving realizations, reducing costs, and also enhancing asset utilization to make its operations more efficient.
  • The company is forayed into a new oral category: Oral Beauty which includes various teeth whitening products which would also be a premium product aimed at Urban Area market.

Growth Pillars

  1. Lead the toothpaste category by growing the volume.
  2. Driving Premiumisation and Innovation.
  3. Drive category growth in toothbrush and devices.
  4. Scaling the Palmolive Brand to drive the personal care category, However the near term focus will be its core category which is bodywash.

(J) Strengths & Weaknesses

Strengths

(i) Strong brand recognition and market leadership

The company is a global leader in the oral care industry, and also its brands are among the most recognizable and trusted in the Indian market. Subsequently, This strong brand recognition gives the company a competitive advantage in terms of marketing and sales.

(ii) Diversified product portfolio and Efficient distribution network

It offers a wide range of oral care products, as well as personal care products such as soaps, shampoos, and deodorants. Also, It has a well-established distribution network in India, reaching millions of consumers across the country.

Weaknesses

(i) High dependence on a single product category

Oral care products account for a significant portion of Colgate-Palmolive's sales in India. Particularly, Years after the introduction of its personal care brand the majortity of sales are from oral care segment. However, The personal care products have been gaining traction in the market.

(ii) High competition in the oral care market

The oral care market in India is highly competitive, with a number of strong domestic and international brands vying for market share. Also, The introduction of ayurvedic products by various new entrants has increased the intensity of competition in Indian oral care market as there has been shift in consumer's preferences.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets and Management Interviews, Industry Publications.

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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