Prabha Narasimhan, the Managing Director and Chief Executive Officer of Colgate-Palmolive India Ltd, expects Palmolive to grow at least as twice as fast as the rest of the company's business and therefore continuously keep increasing its share as contribution to its total business. The CEO also spoke about considering increasing offerings in the Palmolive range

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In an interaction with CNBC-TV18, Narasimhan said, "The bulk of our business sits within oral care, toothpaste and toothbrush. A small proportion of our business sits in Palmolive."

Palmolive is an underserved equity in our portfolio, Narasimhan said. "It has about 67 percent awareness in this country, which is quite incredible when all the new brands are fighting to gain awareness. We have done a little bit of work on this brand to understand root strengths and where it has the right to compete. We have realised that it sits in the area of cleansing, so body cleansing, hand cleansing and that is where we are going to double down and put some effort. We have a huge global portfolio and a global product technology in Palmolive, which we intend to start bringing into India and driving and that becomes the cornerstone of our strategy along with good communication.”

Narasimhan also said that macroeconomic recovery is currently underway and that it sees some improvement in rural sentiment. Colgate-Palmolive (India) is also focusing on growing sales going forward.

“Immediately after COVID to around middle of last year the oral care category in general across toothpaste and toothbrush did see a dip as inflation really pinched and consumers cut back on everything that they felt they could cut back on. However what is fantastic is, over the last few months we are seeing it come back,” she said.

The FMCG major also expects gross margins to expand going forward, and EBITDA margins are likely to sustain at current levels. “We don’t have a stated position on EBITDA. What we are saying is that, we will put in as much money as is required to fund the growth that we need in terms of driving topline growth. EBITDA margins are already really healthy. So the effort will be to maintain them there and thereabouts in the ballpark of where we are at.”

The company will focus on higher usage, premiumization and holding market share. “We are about half the oral care category, and we do see it as our job to grow the overall oral care category. We are committed to better oral health for all of India, so that is driving the oral care category by driving usage. I have said this before but only 20 percent of urban consumers brush twice a day, almost half of rural consumers do not brush every day. So moving these two and driving category consumption really is important to us."

"We have huge opportunity to grow share of our core brands which is Max Fresh, Colgate Strong Teeth and Colgate Active Salt. So that is the second pillar of our strategy. And the third pillar is going up the value chain into things like Colgate Total which is something we are keen to invest behind. We have already started investing behind Visible White last year. We have a new gum launch which again is at a premium. So, we have a lot of offerings coming at the premium end which then becomes the third leg of our strategy,” the CEO said.

Colgate-Palmolive Q1 earnings

Toothpaste maker Colgate-Palmolive (India)'s consolidated net profit surged to Rs 273.7 crore in the June quarter as against Rs 209.7 crore reported during the corresponding quarter in the last fiscal year.

Revenue of Colgate climbed to Rs 1,338.6 crore during the quarter ending June 2023 against Rs 1,208.3 crore in Q1FY23. The earnings per share of the company increased to Rs 10.6 in Q1FY24 from Rs 7.71 during the corresponding quarter of the last fiscal.

"We are pleased with the results for the quarter that saw strong quarter-on-quarter sales growth and improvement across profitability ratios. This has been driven by good execution against our strategy focused on growing the oral care category. While the domestic sales grew at 12.3 percent compared to the same quarter of last year, toothpaste sales recorded a high double-digits growth. We are also seeing early signs of recovery in rural markets and remain optimistic about continued improvement,” Narasimhan had said post Q1 results.

Shares of Colgate-Palmolive (India) were trading 3 percent lower at Rs 1,935 apiece in Tuesday's late afternoon deals. On a year-to-date basis, the stock has risen 28 percent.

Analysts have raised the target price and the earnings-per-share estimates of Colgate Palmolive India Ltd after the toothpaste maker posted better-than-estimated first-quarter results.

First Published:Aug 22, 2023 3:14 PM IST