Colgate share price may give 22% return, says expert; here's what you should do

Shares of Colgate-Palmolive were trading flat on Rs 1,485 midday Wednesday. FMCG company is known for its toothpaste, soap and various other brands and has a market cap of Rs 40,340 crore. As a retail investor for a stock of Colgate-Palmolive, what should be your strategy at this stage? Here is an analysis report by Motilal Oswal Institutional Equities that explains what you should you do:-

The analysis report says that Colgate's market share has been stable over the past few quarters. Volume growth and market share expansion have taken precedence as part of its new strategy, even if it is at the cost of near-term profitability.

It further explains that the direct reach has increased by 30% over the past year. Good Rabi crops may not necessarily translate into a significant boost for FMCG sector volumes. It may take rural growth at par with urban growth. Anything additional will be a bonus. Premiumization is back in focus. No material downtrading is happening either. No material Capex required until Dec'22, it added.

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Colgate share price target: Rs 1,815

''We remain bullish on CLGT from the medium-term perspective, given its reasonable valuations (39.7x FY21E EPS - a huge discount to MNC peer multiples of 50x-56x), likely escalation in earnings momentum and sharp potential improvement in the already impressive RoCE. Targeting 45x Sep'21E, we maintain our target price of Rs 1,815 with a Buy rating,'' said report.

Colgate-Palmolive is the fastest growing and one of the oldest companies catering to personal care products. The product range of the company can be broadly classified into Oral care-Under this segment the company offers a product like toothpaste, toothbrush, tooth powder & tooth whitening products, Personal care -In this segment, it offers products skincare, hair care,  body wash, & shaving creams, Household care.