Colgate

The stock went down into the red after it posted a set of dismal numbers for Q3FY13 wherein its net profit fell 4% at Rs.1111 crore and this was blamed entirely on the increased spend on advertising. Its ad spend was up 45% on YoY and this was mainly on account of increased competition from GlaxoSmithkline which has been going aggressive on its Sensodyne toothpaste. It also launched the mouth wash Plax to beat rising completion from Johnson & Johnson’s Listrine for which again it hiked up its ad spend.  Though Colgate seems to have got a bit jittery with rising competition, it continues to remain the market leader with a strong 54% market share in the toothpaste segment and its share on toothbrush has gone up marginally from 39% in current Q2 to 39.5%.

So things are good at Colgate, it is only ad spend which has dented the bottomline. But then again, this rise in ad spend has helped in terms of increased topline, which went up 14% (YoY) at Rs.784 crore. Underlying volume growth for Colgate was 9%, while price-led growth was 5%.  And it remains amongst the good dividend payers in the country, declaring a second interim dividend of Rs.6/share in Dec’12 while the first interim was at Rs.13/share in Oct’12, taking the total tally to Rs.19/share till date. A debt free company, for 9MFY13, its net profit was at Rs.373 crore, which means that it will clearly overtake FY12 net profit of Rs.445 crore. It continues to remain a veritable blue chip in any portfolio for the long term investors.