Global brokerage firms raise target prices on Colgate post Q4 results; JPMorgan upgrades

Most brokerage firms maintained their rating on Colgate Palmolive Indiaafter the companydeclared its results for the quarter ended March on Monday, but raised 12-month target price up to Rs 1,400, which translates into an upside of 16 percent from current levels.

FMCG major, Colgate-Palmolive India reported a 10 percent rise in net profit at Rs 188.8 crore for the fourth quarter ended March 2018.

The profit was driven by an improvement in operating margins led by lower advertising costs and soft raw material prices. The company also declared a special interim dividend of Rs 11 per share.

A Reuters poll of analysts had estimated net profit for March quarter at Rs 182.6 crore.

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The company reported net sales of Rs 1085 crore in March quarter compared to Rs 1026.9 crore reported a year ago. The company posted volume growth of 4 percent.

A mixed reaction comes from global brokerage firms. Nomura downgrades the stock to Neutral while on the other hand, JPMorgan upgraded the stock to overweight.

We have collated views from various global brokerage firms on Colgate post Q4 results:

Credit Suisse: Neutral| Raise target to Rs 1,225 from Rs 1,120 earlier

Credit Suisse maintains a neutral rating on Colgate Palmolive post Q4 results and raised its 12-month target price of Rs 1,225 from Rs 1,120 earlier.

The volume and market share trends remain weak, but the good part is that Colgate is still losing market share in toothpaste segment. The management is hopeful for a 2018-19 recovery.

Jefferies: Hold| Raise target to Rs 1,220 from Rs 1,190

Jefferies maintains a hold rating on Colgate Palmolive India Ltd post Q4 results but raised its 12-month target price to Rs 1,2220 from Rs 1,190 earlier.

The volumes are still tepid but margin beat continues, which is a positive sign. The management has indicated that the market share will stabalize going ahead. It also sees maintaining current volume growth trend and elevated margins for some more time.

Nomura: Downgrade to Neutral| Target Rs 1,307

Nomura downgraded Colgate Palmolive to Neutral from a buy earlier. Innovation and market share remain issues, said the Nomura note. Volume growth remains flat.

JPMorgan: Upgrade to Overweight| Target Rs 1400

JPMorgan upgraded Colgate Palmolive to overweight with a target price of Rs 1,400. The upgrade is led by expectations of volume growth revival to 5-6 percent.

The global investment bank is of the view that the worst is behind us, and the improvement in volume/market share would drive stock re-rating going forward.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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