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Informist, Wednesday, Nov. 27, 2024

By Steffy Maria Paul and Anand J.C.

MUMBAI – In the last two quarters, demand in the rural areas grew more than that in the urban areas, but the growth is tapering and is not expected to rise further, Colgate-Palmolive India Ltd.'s Chief Financial Officer M.S. Jacob said in an analyst call Wednesday. The weak demand in urban areas remains a challenge in the near-term and the company will continue to monitor it, he said.

The dental care major said it saw growth in sales volume of toothpaste products slowing down in the urban areas and plateauing in the rural areas over the last few quarters. However, the company said it is seeing a revival in volume growth in this category. In the case of toothbrush products, the volumes have grown in both urban and rural areas, with the growth in rural areas starting to outpace urban areas, the company said. Colgate India's toothbrush category grew 1.4 times its peers so far in 2024, it said.

The company had reported a net profit of INR 3.95 billion for the September quarter on revenue of INR 16.19 billion. While the growth in revenue in the current financial year has been led by growth in volumes on the back of benign pricing, going ahead, the company will focus on a balanced growth strategy based on volume-led and pricing-led growth, Jacob said.

The company said its margins have gone up sharply and expects to leverage this to drive its revenue through more investments. Colgate India's earnings before interest, tax, depreciation, and amortisation margin for the September quarter was 30.9%, down from 33% a year ago. The EBITDA margin for Apr-Sept was 32.5%, marginally up from 32.4% a year ago. The company's gross margin for the September quarter was 68.4%, down from 68.6% a year ago. The gross margin for Apr-Sept was 69.3%, up from 68.4% a year ago.

The company's advertisement cost during the first half of the year rose to INR 4.42 billion, from INR 3.87 billion a year ago. The company attributed the 14% increase in advertising spend to its focus on programmes to build consumption and improve oral health, and said it will continue to invest in innovations. Colgate India said it had brought down its inventory at the distributor level over the last two years and it is currently at healthy levels.

Colgate India said it will focus on premiumisation and growing its toothpaste, toothbrush categories. The company said its Palmolive portfolio, which comprises body wash and hand wash products, saw strong double-digit growth so far in the year. The company intends to be more aggressive in this category going ahead, Chief Executive Officer Prabha Narasimhan said. Quick commerce is accretive for the company's growth, margin, and market share, Narasimhan said during the call. The channel grows eight times as fast as its other businesses and is advantageous to incumbent players, she said.

The average selling price of its toothpaste has increased by 13% this year, the company said, driven by opportunities in premiumisation. Newer products launched by Colgate India have all been at higher price levels. The company intends to drive up the average selling price of its toothpastes further, it said.

At 1418 IST, shares of the company traded at INR 3,022.10 on the National Stock Exchange, up 2.4% from the previous close.  End 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Ashish Shirke

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