Colgate Share Price Today: Equilibrium is shifting in favour of growth than profits | Jefferies highlights

Colgate Share Price Today: Jefferies continues to like management's focus on expanding the Colgate franchise through innovative NPDs and good execution. Jefferies maintained Buy rating on Colgate with a revised target price of Rs 1820. Colgate's growth agenda, which began under the current CEO, is gaining momentum as evident in the recent investor presentation. While profitable growth has been the stated objective in the past too, the equilibrium is shifting more in favour of 'growth' than 'profits'. New launches by Colgate continue and there is a well-thought-out strategy that is also supported by marketing spends. Efforts are underway on distribution expansion with share gains visible in MT (Modern Trade)/e-comm.

Colgate Expanding Vedshakti:

Colgate's naturals portfolio has seen strong traction with 70bps increase in penetration, doubling of store availability and +500bps share gains on MT/ E-Comm. The company has refreshed the Vedshakti brand with new packaging, and plans to expand it to adjacent oral care categories and build a naturals platform. After launching Vedshakti mouth spray, Colgate has now launched Vedshakti Oil Pulling. Core doing well too: Re-launch of flagship, Colgate Strong Teeth, done last year has led to +130bps increase in penetration, +120 bps share gain in MT and 15% growth during Covid.

New Colgate toothbrush offerings:

Naturals portfolio is being expanded, even in toothbrushes, with the launch of Zig Zag Turmeric and Super Flexi Salt. The base variant in Zig Zag has also been re-launched with anti-bacterial bristles. Colgate Gentle series of toothbrushes, launched a few months back, has also seen good response.

Colgate Innovation for Diabetics:

Colgate announced the launch of the world's first toothpaste for diabetics. India has 73 mn diabetics, who face a 3x risk of contracting gum diseases. This new product is an ayurvedic solution, which can reduce gum bleeding by 50% and plague severity by 22%.

Colgate buildings heft in pharmacies:

Colgate plans to adopt a pharmacy-first GTM approach for its toothpaste for diabetics. It expects this new product to help in expanding its presence in the chemist channel, where Colgate is historically under-indexed.

Colgate E-commerce on a strong footing:

Colgate has strengthened its e-commerce team, broadened presence across platforms and increased focus on data analytics and product availability. E-commerce business has grown 11x over the last four years; and YTD market share is up +1,300bps YoY.

Colgate Gaining share in MT:

Market share in MT is up 170 bps YoY YTD (vs. +130bps shared in Sep-20). Market share in MT is 1.07x of Colgate's market share pan-India.

Colgate's new initiatives for wholesale:

Colgate has launched a loyalty program, 'Muskaan', for the wholesalers to engage them, strengthen relationships and increase its market share in this channel. Response has been encouraging, with Muskaan outlets growing at 1.7x the rate of overall wholesale.

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Customer education / Palmolive:

With high category penetration, increasing brushing frequency is the key growth driver for Colgate. It is strengthening its customer education initiatives, introducing informative QR codes on each pack and digitising its program. Palmolive has done well, and Colgate would participate in select categories and retail channels.