Colgate Palmolive Ltd Strong Buy : Abhishek Jain, StocksIdea.com

Colgate PalmoliveColgate Palmolive (India) Ltd is a subsidiary of Colgate Palmolive (US). Company was incorporated on 23rd September 1937 as a private limited company. Colgate-Palmolive Company, U. S. A. provided technical assistance, new product information and its worldwide developments in quality dental care and other personal care products. In 1988 Company got a license for producing 24,000 ton per annum of fatty acids.

It also registered with DGTD for production of 30,000 ton of toilet soap per annum. Orders were placed for setting up a fatty acid plant with an annual capacity of 20,000 ton and a toilet soap plant with an annual finishing capacity of
15,000 ton. In 1991 Company launched new Colgate Gel Toothpaste, Palmolive Extra Care and new Palmolive soap and re-launched a high quality Colgate Plus and other toothbrushes.

In 1996 Company launched Colgate fresh stripe toothpaste and Palmolive naturals soap in personal care products segments, Keratin Treatment Shampoo and Palmolive optima in Hair care segment during the year. Axion dishwashing paste was test launched in Maharashtra. Company established a modern facility at Aurangabad to manufacture di-calcium phosphate, a key ingredient for toothpaste.

Company also launched the “Colgate Double Protection”, “Colgate Total” and “Colgate Sensation”. In 2000 Company introduced two new variants to its Palmolive Naturals sopa range and has re-vitalised its sandalwood soap. Company launched of two new variants in its Palmolive Naturals range of beauty soap lime and milk cream. Company relaunched Colgate Gel as “Colgate Fresh Energy Gel”. Company has launch of its International Palmolive Shave Gel and Palmolive Shave Foam in response to growing consumer interest in skin conditioning benefits.

Colgate has re-launched its Cibaca toothpaste as All New Cibaca Top. Colgate-Palmolive (India) has launched its new Zig Zag toothbrush. Colgate launched Colgate Navigator toothbrush and double-action Palmolive shaving cream. Company has launched the Naturals Line of toilet soaps in transparent bars that come in see-through packaging.

Colgate-Palmolive launched shower gel variant also. From few years the company has increased it expenses for promotions and aggressive campaigning. Apart from launching battery-based toothbrushes, the company has undertaken oral and dental care awareness programs.

Colgate has not been able to achieve any significant success in expanding its non-oral care portfolio. Company has a rural distribution network with over 30 lakh outlets. CPIL has its plants in Mumbai and Aurangabad in Maharashtra, and a toothpaste manufacturing facility at Baddi in Himachal Pradesh. It manufactures di-calcium phosphate, a key ingredient in toothpaste. Subsidiaries of the company are Passion Trading & Investment Company, Jigs Investments and Multimint Leasing & Finance.

Products & Services—

Company is the market leader in the Indian oral care market, which is the major part of its revenues. Company is also into other personal products like shampoos, shaving products and soaps. Company Manufactures and market oral care products like dental cream, tooth powder, tooth brushes, whitening products.

In Personal care segments it have body wash, liquid hand wash, shave preps, skin care and hair care products (hair oils, shampoos, brilliantine). It has products for treatment of Gingivitis, Sensitivity, tooth whitening, fluoride therapy, mouth ulcertreatment etc. The products are marketed under the trademarks "Colgate", "Palmolive", "Halo" and "Charmis". Company has made a presence into a new category of herbal care with the "Colgate Herbal". Its “Colgate Active Salt”, claimed to be the first toothpaste in India to contain salt.

It also launched new Colgate cibaca lal dantmanjan, a red tooth powder. It is the market leader in the branded Indian oral care market, with a 51% market share in the toothpaste segment, 48% market share in the tooth-powder market and a 30% share in the toothbrush market. It also has a presence in premium toilet soap and shaving products, which are sold under the Palmolive brand.

Valuation— Company’s strong parentage and leadership position in oral care segment, we are bullish on company’s future performance. AT CMP, Stock is trading at 24.7 P/E multiple of its FY2011 earnings with a strong dividend yield. We recommend investors to “Buy” “Colgate Palmolive” with medium to long term investment horizon.