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Secure moats, growth opportunity protected

Colgate

Detailed Report | 4 July 2016Sector: Consumer

Investors are advised to refer through important disclosures made at the last page of the Research Report.Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Krishnan Sambamoorthy ([email protected]); +91 22 3982 5428

Gautam Duggad ([email protected]); +912239825404 / Vishal Punmiya ([email protected])

Brand

DistributionR&D

Colgate

4 July 2016 2

Contents

Summary ............................................................................................................. 3

Category growth potential .................................................................................... 5

Key moats ............................................................................................................ 6

Market share loss in the past three quarters ....................................................... 16

Colgate’s strong response ................................................................................... 17

Financials ........................................................................................................... 21

Financials and valuations .................................................................................... 27

Colgate

4 July 2016 3

Secure moats, growth opportunity protected Fighting back by focusing on innovations, increasing ad spend and core strengths

We are upgrading Colgate to Buy based on the following factors: Strong potential for growth in the category. Encouraging response to competitive intensity in the form of renewed focus on

new launches and advertising, which has already helped arrest market share decline in the past two months after a period of subdued performance.

Management’s confidence on growth prospects in our recent meeting. Colgate’s extremely strong moats on distribution, category development efforts,

brand strength, concentrated focus in oral care and demonstrated success of its Indian R&D center.

Remarkable track record in tackling competition in oral care, both in India and other emerging markets.

While recovery in sector demand is still some time away, and competitive intensity is likely to remain high in FY17, likely good monsoon and government schemes are expected to provide a fillip to demand. Colgate, with over a third of its sales coming from rural India, is likely to be a major beneficiary. Colgate’s long-term earnings growth potential remains high, return ratios best of breed, OCF and FCF generation impressive, and the stock’s valuations appear reasonable post the decline of 16% in its price from its peak levels. P/B is close to decadal lows, and P/E is lower than both five-year average and MNC peer multiples.

Category growth potential: India’s oral care category per capita consumption and premiumization are among the lowest even in comparison to that in the other emerging markets. If India manages to achieve China’s current levels over the next decade, its oral care market size (currently ~INR 76bn) will quadruple from current levels, translating to potential 15% CAGR category growth for the next decade.

Strength of moats compared to peers: Colgate has the advantages of the following moats: (1) By far the best distribution reach in oral care with over 5m outlets (and in fact the second best across all FMCG products); this strength is being consolidated with a significant increase in rural coverage over the past few years; (2) Unmatched category development efforts in schools, a cumulative reach of 125m school children and 5.5m people in villages, enabling it unlock category growth potential; (3) The most dominant brand (more than 3x market share of any other brand in oral care), as well as the most trusted brand (rated no. 1 by Brand Equity in each of the past five years and the only brand in the entire consumer space to be in the Top 3 in the last 15 years; (4) benefits of concentration of focus in oral care. With 97% of sales for the company coming from oral care, a category that it dominates, Colgate is able to channel its vast cash flows into advertising and capacity expansion unlike peers for whom oral care is at best 10% of sales. Colgate has by far the best A&P muscle in the category with annual spend of over INR7b, enhancing brand moat.

Initiating Coverage | Sector: Consumer

Colgate CMP: INR925 TP: INR1,090 (+18%) Upgrade to Buy

BSE Sensex S&P CNX 27,279 8,371

Stock Info Bloomberg CLGT IN Equity Shares (m) 272.0 52-Week Range (INR) 1,050/788 1, 6, 12 Rel. Per (%) 5/-12/-7 M.Cap. (INR b)/ (USD b) 251.6/ 3.7 Avg Val ( INR m) 370 Free float (%) 49.0 Financials Snapshot (INR b) Y/E Mar 2016 2017E 2018E Sales 41.3 45.7 52.5 EBITDA 9.3 10.6 12.8 Adj. PAT 6.0 6.5 7.9 Adj. EPS (INR) 22.0 23.8 28.9 EPS Gr. (%) 6.9 8.5 21.4 BV/Sh.(INR) 37.5 41.9 45.2 RoE (%) 66.8 60.1 66.5 RoCE (%) 65.9 58.9 65.3 P/E (x) 42.1 38.8 32.0 P/BV (x) 24.7 22.1 20.4

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Colgate

4 July 2016 4

Colgate is able to spend an unrivalled amount of INR 12.6b between FY14-FY17E in state-of-the-art facilities, thereby not only augmenting capacities and attaining large scale benefits, but also gaining on ability to roll out higher quality and premium products faster and on logistics costs as a result of being closer to suppliers and large markets; and (5) Significant contributions from its India R&D center, one of Colgate’s few global innovation centers, which has enabled successful roll out of herbal/natural products.

Past track record highly encouraging: Over the past 25 years, Colgate has emerged even stronger during periods of heightened competitive activity. The industry has witnessed various trends in the past, such as (1) Hindustan Lever (HUL) launching gel toothpaste in the 1990s (2) Advent of lower-end players and herbal players, in the last decade (3) Launches in the premium segment by Glaxo (4) Launch of Oral B toothpaste by P&G and (5) Spike in HUL’s advertising activity. However, by responding to these with new product launches, and aided by its distribution reach and ad spend, Colgate has eventually been able to capitalize on all new trends and increase its market share to multi-decade high levels as recently as June 2015.

Top-line growth levers: Given category development potential, Colgate’s strong moats, slew of new launches in the herbal as well as the much larger non-herbal segment and recovery in the rural segment where Colgate has significantly expanded its reach in the last few years, we believe the company is well poised not only to arrest its recent market share decline, but also to resume market share gains over the medium to long term.

Margin and return ratios: We believe that continued category premiumization, a reversal to mean A&P of 14-16% of sales in the medium term and strong operating leverage after volume recovery sets in could add ~300bp to Colgate’s EBITDA margin over the next three years. Colgate’s massive capex plan of around INR3b per year over FY14-17 coincided with the recent slowdown in FMCG demand, resulting in a loss of close to 150bp in other expenses to sales for the past two years. As demand recovers and Colgate’s margins expand, there should be further improvement in its return ratios and dividend payout levels, which are better in comparison to its peers, but below the company’s historically high levels.

Upgrade to Buy: After the 16% decline in the stock price from its peak, Colgate is now trading at 32x FY18E EPS, a discount to both its MNC peers like HUL, Nestle and PGHH as well as its own historical average 1-year forward multiples for the past five years. On P/B, the stock is trading closer to a decadal low. After being taken by surprise by Patanjali, we are encouraged by the strong response in the form of slew of new launches and increased adspend, which has enabled market share gains in the past two months after some losses in the preceding three quarters in what has been otherwise a consistent uptrend in market share to multi-decade highs until June 2015. With resumption of healthy earnings growth from FY18, and given best of breed return ratios, likely increase in already impressive operating and free cash flows as well as dividend payout going forward, we target 36x June 2018 multiple (in line with average 1-year forward multiple for the past five years), giving us TP of INR 1,090 (INR 942 earlier) and potential upside of 18%, resulting in upgrade to Buy.

Stock Performance (1-year)

Shareholding pattern (%) Mar-16 Dec-15 Mar-15 Promoter 51.0 51.0 51.0 DII 18.3 6.1 5.0 FII 6.0 18.3 20.8 Others 24.7 24.6 23.2

FII Includes depository receipts

Colgate

4 July 2016 5

Category growth potential

India’s oral care category per capita consumption and premiumization areamong the lowest even in comparison to that in the other emerging markets. IfIndia manages to achieve China’s current levels over the next decade, its oralcare market size (currently ~INR 76bn) will quadruple from current levels,translating to potential 15% CAGR category growth for the next decade.

Exhibit 1: Market size to double if India’s PCC reaches China’s levels

Source: Company, MOSL

Exhibit 2: Market size to double if India’s ASP reaches China’s levels


Number of Indians brushing twice a day even in urban areas is less than 20%. Asawareness of hygiene levels increases, per capita consumption could risesignificantly.

In India, premium segment is less than 20% of sales, despite strong growth inrecent years. Brazil, another BRIC peer, has witnessed a huge increase inpremiumization in oral care in the past decade from 18% to 41%.

Exhibit 3: Premium innovation drove market share growth in Brazil


Given that realization in premium products is anywhere between 2x and 3.6x that of the basic Colgate Dental Cream, India’s premiumization potential is high even if India does not track Brazil’s scorching pace of premiumization over the next 10 years.

692

519

352 237

179

Brazil USA Philipines China India

Per capita consumption - 2015 (gms/1000)

Brazil USA Philipines China India

18 12 10 6

USA China Brazil India

Average Selling Price ($) Per KG of Toothpaste

3x

x 1.6x

1.9x

41.8 42.7 39.9 34.5 34.7 34.4 32.2 32.2 33.0 32.2 31.7 31.3

18.1 19.6 24.4 32.6 34.2 35.6 38.5 38.4 38.2 39.2 39.8 40.8

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015B

Base Business Premium

Colgate

4 July 2016 6

Key moats

The key moats for Colgate are 1) Distribution reach, particularly rural reachColgate has the best distribution reach in the oral care category with over 5moutlets in India. In fact, it is the second best distributed FMCG brand in the countryafter HUL’s Lifebuoy.

Colgate is also much stronger than its peers in rural India. Colgate’s expansion in recent years has only widened the gap between itself and its peers in rural India.

Exhibit 4: Directly covered rural outlets have nearly doubled in 4 years


Exhibit 5: Increase in rural distributor sales representatives


Exhibit 6: Large increase in number of villages covered


Exhibit 7: Rural distribution vans grew 3x over 2012-15


0.8 1.0

1.1 1.3

1.4

2011 2012 2013 2014 2015

Rural India - Number of stores under direct coverage (mm)

353

1046

1372

2012 2013 2014

Rural India - Distributor Sales Reps

22

41

54

2012 2013 2014

Rural India - Village Coverage ('000)

340

801 951

1,031

2012 2013 2014 2015

Rural distribution vans

3x

Colgate

4 July 2016 7

Globally, Colgate has had experience in leading distribution increase and deriving advantages from it, leading to strong sales growth and market share gains. In both 2014 and 2015, Colgate was chosen as the top brand in the world in the Kantar Worldpanel brand Footprint report. Colgate globally is: a. The leading beauty and wellness brand globally in terms of Customer Reach

Points (CRP) with 67.7% reach (the rest of the top 10 reach only 25% on anaverage).

b. Leader in addition of households last year (with 40m households added ascustomers worldwide in CY15).

Exhibit 8: Distribution reach is a global advantage

Source: Kantar Worldpanel, Company, MOSL

Exhibit 9: Added 40m households globally in the last year itself

Source: Kantar Worldpanel, Company, MOSL

Colgate

4 July 2016 8

2) Benefits of massive category development efforts

Colgate’s category development plans are unmatched not just in oral care, butacross all FMCG segments in India. For many years now, Colgate has been atthe forefront of driving category growth, which enables it to take first-moveradvantage in a category with high growth potential.

Until FY15, the company’s Bright Smiles Bright Futures Program had reached atotal of 125m school children in nearly 300,000 schools across the country,including 10m kids in nearly 30,000 schools in FY15 itself. In addition, thecompany’s Oral Health Month Program, in association with dentists, reached5.5m people in villages last year. No other company in any Indian FMCGcategory has category development efforts on schools and villages anywhereeven close to this scale.

With over 300m people in India not using modern oral care products, theseprograms are an excellent way of conversion. For a lot of the potentialincremental customers, Colgate, because of such efforts, is the first and onlyoral care brand that they are aware of. With the widest distribution in thecategory, as discussed earlier, Colgate is also likely to be the only oral care brandavailable in many areas as well.

Similar to the way Colgate has used its global distribution advantage comparedto peers, it has also been able to drive growth and market share gain through itscategory development programs.

While India is a significant part of these efforts, it is by no means the only part.As discussed earlier, in India, Colgate has cumulatively reached 125m schoolchildren. The corresponding number is ~850m school children worldwide for theparent and a crucial factor in its emerging market sales growth. Incrementally,India with 10m school kids reached every year has been a fifth of the globalincremental reach of 50m every year.

Exhibit 10: Global category development program picking up pace


Colgate

4 July 2016 9

Interestingly, while the incremental addition of children reached by the global program was 50m each year earlier, this is now being considerably ramped up to 90m each year (to reach 1.3bn children cumulatively by 2020), with possibly higher targets for India as well.

These global efforts on both category development as well as distribution have meant that Colgate is far ahead of peers globally, with a 44% market share in toothpastes compared to less than 14% for other players.

Over the last 20 years, Colgate’s share in the global toothpaste market has increased from 31% to 45%, while that of P&G and Unilever has declined from 16-17% to 13%.

In emerging markets, Colgate’s share in toothpastes is even higher at ~50%, with the second largest player being far behind at 10%.

Exhibit 11: Worldwide toothpaste market share (%)


Exhibit 12: Toothpaste share - Emerging markets (%)


Exhibit 13: Market share in India has increased in the last 10 years


In India too, there has been a steep increase in market share for Colgate in toothpastes over the last 10 years. Toothpaste is ~80% of the Indian oral care market.

Colgate is also the market leader in India, with a consistently increasing share in the other large component of the oral care market, toothbrushes (around 17% of the oral care market).

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Colgate Comp. 1 Comp. 2 Comp. 3

1994 2015

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Colgate

Comp. 1

Comp. 2

Comp. 32015 YTD

48.8 49.4 52.2 53.3 52.7 54.5 56.1 56.8 57.2 55.7

25.1 24.6 22.8 22.6 23.3 23.8 22.8 21.7 19.8 19.4

11.9 12.2 12.9 13.7 14.8 13.9 13.4 13.4 14.0 15.5

2007

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CP Toothpaste Comp 1 Comp 2

Colgate

4 July 2016 10

Exhibit 14: Market share in toothbrush is 2.9x of the next competitor


Colgate is also the largest player globally in toothbrushes, both manual and automatic.

3) Advantage of singular focus in a category where they have unmatched globalexpertise.Single category focus in oral care, a key area of strength both in India andglobally, gives Colgate benefits of concentration of ad spend and cash flowswhich other players cannot match. This increases barriers to entry over otherplayers.

Colgate has by far the best A&P muscle in the category with an A&P spend ofover INR7bn and 17% as a percentage to sales, among the highest for any playerin any single category in Indian FMCG. Oral care forms 97% of Colgate’s totalsales unlike peers for whom the category is much lower in salience. For Dabur,the segment is only ~10% of sales, while for HUL oral care is only ~6% of sales.

Exhibit 15: Only Glaxo Consumer in FMCG and Asian Paints among consumer peers can match Colgate’s single category A&P


33.4 38.4 38.0 35.9

39.8 42.3 42.8 44.5 46.2

11.4 11.9 14.8 17.8 18.8 18.4 18.4 17.8 15.7

5.9 6.4 7.2 7.2 6.7 7.5 8.0 9.4 10.9

2008 2009 2010 2011 2012 2013 2014 2015 YTD2016

CP Toothbrush Comp 1 Comp 2

9 6 7 7 4 7 7

45

9 2 6 5

AsianPaints

Britannia -S/L

Colgate Dabur - S/L Emami -S/L

GodrejConsumer

- S/L

GSKConsumer

Hind.Unilever

ITC JyothyLabs

Marico -S/L

Nestle

Ad spends (INR b) FY16

Colgate

4 July 2016 11

Exhibit 16: …. and only Emami is slightly superior on a percentage to sales basis, but well below Colgate on absolute basis


Consistently higher advertising ahead of peers creates higher awareness, strengthens brand power and facilitates immense support for new launches.

Apart from the benefits of concentrated large advertising on oral care, unlike peers, Colgate also has access to the war chest of OCF between INR5-6bn every year to invest in the oral care business, unlike peers. Colgate has spent/will be spending ~INR12.5bn between FY14-FY17 on first setting up state-of-the-art toothpaste and toothbrush facilities at Sanand and Sri City in FY14 and FY15, and subsequently expanding capacities substantially in both these centers in FY16 and FY17, also an indication of the parent’s confidence about the Indian entity’s prospects.

These capital investments enable faster roll out of better quality and premium products, attain logistical benefits due to being closer to suppliers as well as customers unlike just the Baddi and Goa plants earlier. These investments will also help enhance scale advantages even further compared to oral care peers who cannot match such massive investments in a single category. With state-of-the-art manufacturing, there is also potential to be a regional sourcing hub.

Exhibit 17: Healthy operating cash flows…


Exhibit 18: …. enable to fund large capex plans


Putting these investments by Colgate in perspective, over the period between FY14-FY17, Hindustan Unilever, India’s largest FMCG company and the second largest player in the oral care market, is likely to invest only ~INR16bn in capacity expansion across all its categories and oral care is less than 10% of its sales. Dabur is likely to invest only ~INR6bn as capital expansion over this period across all its businesses, of which oral care is only ~10% of sales.

6 8

17 12

19 14 15 14

2

12 12

6

AsianPaints

Britannia -S/L

Colgate Dabur - S/L Emami -S/L

GodrejConsumer

- S/L

GSKConsumer

Hind.Unilever

ITC JyothyLabs

Marico -S/L

Nestle

Ad spends as a % of sales FY16

5.2 6.0

5.5

7.2

FY14 FY15 FY16 FY17E

OCF (INR b)

3.6

2.9 3.0 3.0

FY14 FY15 FY16 FY17E

Capex (INR b)

Colgate

4 July 2016 12

Another point to note is that Dabur and HUL’s total sales across are ~2x and ~8x higher respectively on total sales compared to Colgate, but ongoing capacity expansion investments are much lower on a proportionate basis.

These investments will go a long way placing Colgate in a sweet spot compared to peers in taking advantage of the large growth opportunity in the sector as highlighted earlier.

4) Brand strength

Colgate most dominant brand at more than 3x any other brand in terms ofmarket share and importantly is consistently rated as the most trusted brandacross all FMCG products, according to Brand Equity Survey. In fact it is the onlybrand in India to be consistently in the Top 3 for the last 15 years.

Exhibit 19: India’s most trusted brand


This trust is an important factor in a large part of both existing customers as well as incremental customers staying with the brand. Since Colgate is the market leader as well as the biggest gainer of incremental customers through the category development efforts, the brand trust acts as a strong moat. Moreover, it has the advantage of being in the personal hygiene segment, where there is a larger degree of loyalty compared to other FMCG categories.

5) India R&D Centre – The success of Indian R&D center has enabled productinnovation. India is one of the few global technology centres for Colgate.Unlike foods where products have to be customized to a large extent forlocal tastes, MNCs in personal care generally roll out the same productsworldwide. Colgate has been an exception on that front and its Indian R&Dcenter has enabled strong roll out of innovative products for Indiaparticularly in the herbal/ natural space even before the recent boom. Thisenables them to participate actively in the ongoing herbal segment boom inIndia. Colgate Active Salt and Colgate Active Salt Neem have over 7% marketshare in toothpaste category, and over one-third share in herbal space, anarea perceived to be a relatively weak for Colgate. Within this, Active SaltNeem launched just last year already has over 1% market share.

Colgate

4 July 2016 13

Exhibit 20: Recent herbal/natural segment launches in India


In addition, the company also has access to innovations as a result of the parent R&D spend of over USD 250m every year. Oral care is half of the parent sales. Its competitors in oral care in India have no such advantages.

Other strengths Colgate in India has the widest portfolio among its peers, which enables them

to have a share in all segments of the market and across price points. Colgate isthus able to take advantage of all trends, unlike peers, all of whom haveportfolio gaps. These trends can be within the existing sub segments, butColgate as a result of its global and particularly emerging markets expertise inoral care is able to anticipate or respond nimbly to possibilities of new subsegments emerging in the category. Colgate Visible White, launched only threeyears ago, is already among the largest oral care brands in India.

Colgate’s R&D support from the parent, the largest oral care player in the world,enables Colgate India both in terms of access to new products and R&D. Colgatetherefore need not be the market leader in all sub-segments, but will have astrong share in all pies, leading to overall market share increase.

Colgate

4 July 2016 14

Exhibit 21: Products across all price points


What is often missed amid the recent FMCG and oral care segment slowdownand ongoing competitive intensity is Colgate India’s fairly recent track record ofdouble-digit or close to double-digit volume growth for 20 successivequarters up to 3QFY14. When demand recovers, Colgate with all its strengthsand incremental investments in the business will be a big gainer.

Exhibit 22: Volume growth consistently close to double-digits until recent sector slowdown


Colgate India’s increasing importance to the parent’s plan for Oral careColgate India’s oral care sales (97% of total India sales) are 8.3% of the parent’ssales in the oral care segment globally and its total sales are 4% of the parent’stotal sales. This makes the India oral care business highly influential in the globalscheme of things for the parent, which will strive to do everything in its powerto grow this business over the long term.

Exhibit 23: Increase in salience of India oral care business in parent’s oral care portfolio…


Exhibit 24: …as well as overall portfolio


15 14 18

15 11

14 12 13 13 14 15 15 14

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Toothpaste Volume Growth (%)

543 560 584 628 624

7.5 7.5 7.3

7.9 8.3

2011 2012 2013 2014 2015

Colgate oral care sales (USD m)

Colgate India oral care as a % of Colgate global oral care sales

559 577 603 647 643

3.3 3.4 3.5

3.7

4.0

2011 2012 2013 2014 2015

Colgate India sales (USD m)

Colgate India sales as a % of Colgate global sales

Colgate

4 July 2016 15

During our recent meeting with the MD and CFO of the India business, we were enthused by the reiteration of their confidence on the business prospects. Some takeaways from that meeting in relation to growth prospects were: The company’s performance in each country is measured across a few key

metrics, such as volume growth, gross margin and market share. Achieving a YoYimprovement is crucial in every country and the company sets targets inconjunction with regional teams. For developing and high growth economies,the company sets goals which are higher than that for other countries.

Achieving volume growth is a key priority for the company. The managementbelieves that there is immense room for volume growth as penetration andconsumption led room is still very high in India.

The company’s volume growth will also be boosted by the occasional users of itsoral care products turning into regular users.

India’s infrastructure development will help the company reach more ruralmarkets as will its own expansion.

Rural expansion: Colgate has expanded rapidly over the past few years. Thecompany will always continue to work on rural expansion.

Colgate aims to drive habit changes through kids who are seen as the changeagents in hygiene.

Pricing vs. disposable income: Indian pricing is one of the lowest in the regions,with the INR5 and INR10 price points being very crucial.

Oral care is the company’s bread and butter and the management will take allmeasures required to drive growth in this category.

Colgate is carrying out test marketing in South India to understand theconsumer’s brushing habits (brushing twice a day). The company has dividedhouseholds into two sets - those where members brush their teeth twice a dayand where members brush once a day. The company is still monitoring theresults, which have been encouraging so far.

There is still significant room for growth in oral care. Personal care is not yet afocus area for the company and its ad-spend for this category will be largely in-store

Colgate

4 July 2016 16

Market share loss in the past three quarters

Colgate India has reported market share decline for three quarters in a row from September 2015 onwards. The company has effectively lost market share of 220bp YoY over this period, of which the last reported period January-April 2016 itself reported a 160bp decline sequentially.

Exhibit 25: Marginal market share losses recently check long-term uptrend for the time being


Exhibit 26: Colgate has lost 220bp market share over the last three reported periods


The loss in market share has largely been due to a. The ongoing herbal wave led by Patanjali, a recent entrant into the category.b. Wider availability of Patanjali’s products, including its oral care products, in

modern retail stores like Big Bazaar, D-Mart, Reliance Fresh and Star Bazaaramong others, a process that started in October 2015.

48.8 49.4 52.2 53.3 52.7 54.5 56.1 56.8 57.2 55.7

25.1 24.6 22.8 22.6 23.3 23.8 22.8 21.7 19.8 19.4

11.9 12.2 12.9 13.7 14.8 13.9 13.4 13.4 14.0 15.5

2007

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CP Toothpaste Comp 1 Comp 2

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Jan-

Sept

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'13

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Toothpaste Market Share (%)

Colgate

4 July 2016 17

Colgate’s strong response

What is noteworthy is that after being initially taken by surprise at Patanjali’s fast-paced growth, Colgate’s management has responded quickly by launching new products at a faster pace, both in herbal and non-herbal segment, and increasing its A&P to sales in the last quarter.

Exhibit 27: New launches in recent times


Exhibit 28: A&P to sales increased sharply in 4QY16


In our recent meeting with the management: We were informed that Colgate gained a market share of 70bp in toothpaste in

April 2016 (after a slip in February and March), followed by an additional gain of10bp in May 2016, thereby arresting the decline in its market share in 4QFY16.

The management sounded far more confident than they appeared to be at thecompany’s recent earnings call.

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Ad Spend (%)

Colgate

4 July 2016 18

While it may still be too early to call out a recovery or stability in Colgate’s market share for the near term, the company’s strong response to the new challenger is highly encouraging, and it has been able to not just limit the damage, but also gain market share in the last two months by 70bp and 10bp respectively.

Some other noteworthy factors about the market share trend Colgate’s market share was at multi-decade high levels in June 2015 before

declining marginally. The company’s market share had been increasingly steadily year after year,

indicating its growing dominance over its existing peers in the category. The decline in Colgate’s market share for three quarters in a row from

September 2015 was mainly due to the start of the increasing availability ofPatanjali’s products across modern retail channels during that period, a processthat is now complete.

Based on market share data for the past two months April and May, Colgate hasnot only managed to arrest incremental loss of market share but also growmarket share and recover some of the losses in the preceding quarters.

Patanjali reaches only 200,000 outlets in terms of its reach in the traditionalretail front, which is 90% of the market in India for oral care as well as otherFMCG categories. Patanjali also has capacity and logistical challenges in meetingdemand from small retailers. While it is working to improve all of these issues,we believe that its threat to mount the next phase of serious challenge toColgate in traditional retail where Colgate has access to 5m outlets is manyyears away. By that time Colgate would not only be better prepared but also beable to strengthen its moats further.

Colgate has also been able to participate in and benefit from the increasedsalience of the herbal segment in toothpaste (which we reckon is now 19% ofthe toothpaste market). Active Salt, Active Salt Neem and Colgate Herbal have ashare of about 7% of the toothpaste market, translating into a market share of~37% for Colgate in the herbal space, which is healthy considering that thecompany is often perceived as being weak in this segment. Historically, Colgatetends to be an active participant in most trends in oral care even if it may not bethe market leader in that segment.

Herbal toothpaste still only ~19% of toothpaste segment. Colgate is relatively farmore dominant in the other sub segments, which are over 80% of the marketand also have huge growth potential.

For Colgate, the pace of new launches has picked up both in the herbal and non-herbal categories.

Colgate

4 July 2016 19

Exhibit 29: Range of new launches across categories over last three years


Comments from recent meeting with the India business MD and CFO on competition and innovation There will always be competition for Colgate and its rivals will continue to make

noise. The management aims outshout the competition. The naturals space always existed, but has been expanded by Vicco, Himalaya,

Dabur and more recently, Patanjali. The sensitive segment had been the talk of the town 12-18 months ago, but

Ayurveda/naturals is now in the limelight. There exists a misperception in the market that Colgate does not have a

presence in the herbal/naturals toothpaste space. Actually, the company has abroad toothpaste portfolio with a presence across all sub-segments – strongteeth, freshness, natural, herbal, whitening, sensitive as well as low unit packs.

Colgate is witnessing heightened innovation activities. Recently, the companylaunched Colgate Pain Out and Colgate Sensitive with Clove, which are aimed atproviding quick relief from tooth pain and lasting relief from tooth sensitivity,along with the goodness of an age-old home remedy, respectively.

The company can easily drive volume through promotions, but does not want todo so.

One of the key competitors has lost significant market share in toothbrushes. Colgate is not disregarding the possibility of P&G making a comeback in

toothpastes after failure of ‘Oral-B’ launch three years ago.

Past track record of response to competition extremely encouraging In the early 90s, Colgate encountered competition from HUL’s new product,

Close up toothpaste in the gel segment. The new Close up toothpaste did gainmarket share in the initial years, though Colgate responded with Colgate MaxFresh which gradually helped the company regain its lost market share intoothpaste. As it stands today, Max Fresh is gaining market share in the topthree gel toothpaste consuming states and is the leader in Maharashtra, whichis the largest gel toothpaste market.

During the early part of the last decade, a slowdown in consumption as a resultof poor monsoons had led to the emergence of price warriors, such as Ajanta,Amar and Anchor, who gained market share. Colgate responded by increasingfocus on its low own price brand, Colgate Cibaca which had been acquired in theprevious decade. Colgate leveraged on its fast expanding distribution reach,

Colgate

4 July 2016 20

focused on advertising and started its unparalleled efforts to develop the category. These smaller brands have now been almost totally wiped out and Colgate Cibaca is currently the dominant market leader in the lower price segment.

In response to the earlier shift in preference for herbal in the last decade,Colgate developed Colgate Herbal, Colgate Active Salt and Colgate Active SaltNeem through its local R&D efforts. These products have a combined share of7% of the overall toothpaste market, thus allowing Colgate to participate in theprevious herbal wave as well as in the current one. At 4% of global sales,herbal/natural space is a category that the parent is also familiar with.

In response to the launch of Sensodyne by Glaxo, Colgate has launched a slew ofnew premium products, such as Colgate Sensitive, Colgate Sensitive Pro Relief,Colgate Visible White and more recently, Colgate Pain Out (which incidentally isalso an herbal product with clove). While Sensodyne is the leader in thepremium segment, Colgate is not far behind with its retinue of above brands.

In response to P&G’s launch of Oral B toothpaste in July 2013, and HUL’sunprecedented advertising for Pepsodent on national television and printmedia, directly claiming that Pepsodent was better than Colgate dental cream,Colgate sharply increased its ad spend and quickened the pace of new productlaunches. As a result, Colgate’s market share actually increased to multi-decadehigh levels, while Oral B toothpaste had to exit the market, and Pepsodent’smarket share continued to decline.

Exhibit 30: Colgate raises its A&P levels in response to P&G and HUL in FY14


Colgate has always responded to any trend in a particular sub-segment in oralcare, thus ensuring its active participation in that segment despite not alwaysbeing the market leader in that space. This, along with its dominant position inthe other sub-segments, ensures a continuous improvement in Colgate’s overallmarket share.

3.0 3.5 4.1 4.9 6.9 7.1 7.2 14.7

15.2 15.3 15.4

19.2

17.9 17.4

FY10 FY11 FY12 FY13 FY14 FY15 FY16

Ad spends (INR b) Ad spends as a % of sales

Colgate

4 July 2016 21

Financials

Top-line growth Given all its above-mentioned strengths and a slew of new launches in the herbal as well as the much larger non-herbal segment, we believe Colgate is well poised not only to arrest its recent market share decline, but also to resume market share gains over the medium to long term.

With the rural segment slowing down over the past few quarters after two consecutive poor monsoons, Colgate has not been able to reap the benefits of its rural expansion. With likely above-normal monsoon this year, rural demand could potentially recover in 2HFY17. The government schemes like Direct Benefit Transfers to boost rural demand in the last budget as well as implementation of the One Rank One Pension (OROP) scheme and 7th Pay Commission Scheme are also likely to boost demand.

Colgate is also much stronger than its peers in rural India, and once the rural market recovers, it will be difficult for peers to match the company’s growth momentum. Colgate’s expansion in recent years has only widened the gap between itself and its peers in rural India, and once rural recovery resumes, the company’s market share will also begin to gain momentum.

However, while we expect potential recovery in 2HFY17 due to the factors mentioned above, we are still not expecting any sharp recovery for the full year FY17, assuming the same pace of sales growth as has been the case in the preceding two years. It needs to be noted that FY16 gross sales growth was also ~10%, but appears to be lower because of the one-off impact of excise benefits at its Baddi plant coming off during that year.

Exhibit 31: Volume growth to recover in FY18 and FY19


Exhibit 32: ….as will be the case with sales growth


Margin levers Colgate’s other expenses to sales has been impacted by almost 140bp due to its

massive capacity expansion, which has come amid a slowdown in demand. Itslarge rural expansion plans in the past few years have also impacted costs, buthave not yet shown impact on sales due to rural slowdown due to poormonsoon in FY15 and FY16.

13.0

14.5

10.3

9.5

5.5

2.3

5.5

9.0

8.0

FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

Volume growth (%)

22.

2

26.

2

30.

8

35.

4

39.

5

41.

3

45.

7

52.

5

59.

6

13.2%

18.2% 17.5% 14.9%

11.6%

4.5%

10.6%

14.9% 13.4%


Sales (INR b) Sales growth (%)

Colgate

4 July 2016 22

Between FY14-17E, Colgate has invested over INR12b (~INR3b each year) for first setting up a state-of-the-art toothpaste and toothbrush manufacturing facility in Sanand and Sri City, respectively, and subsequently undertaking further massive capacity expansion. The new facilities and their expansion will result in strong realization and logistical benefits for Colgate over the long term. With the resumption in sales growth momentum from 2HFY17, we expect the company to recover some of these cost increases.

Being state-of-the-art facilities, these plants can also act as an export hub (exports formed less than 1.5% of Colgate’s total sales in FY15) for the company. These massive investments also indicate Colgate’s confidence in the long-term growth potential of the Indian oral care market.

Exhibit 33: There will be savings on other expenses to sales going forward


Continuing category premiumization has also resulted in further gross marginexpansion for Colgate, a process that continued even during the slowdown andlikely to continue going forward.

Exhibit 34: Premiumization-driven gross margin expansion to continue


Colgate’s A&P to sales continues to be higher than the long-term average due toits current low sales growth, though we expect it to normalize in the range of14-16% once the sales momentum resumes. In absolute terms, we are stillassuming double-digit increase in A&P but these expenses decline on apercentage to sales basis due to higher sales growth. At 16.7% in FY19, we arestill assuming higher A&P to sales compared to the long-term average.

3.6 4.4 5.2 6.1 7.2 7.4 8.1 9.2 10.3

15.5 16.2 16.3

17.0

18.0 17.9 17.7 17.5 17.2


Other expenses (INR b) Other expenses as a % of sales

58.7 58.2 57.8

59.6

62.4 63.4 63.7 64.1 64.3


Gross Margin (%)

Colgate

4 July 2016 23

Exhibit 35: A&P to sales currently higher than long-term average of 14-16%


All this together could result in an improvement of 280bp in the company’s margins over the next three years.

Exhibit 36: After a tepid FY17, EBITDA growth will be strong in FY18 and FY19…


Exhibit 37: …led by 280bp EBITDA margin increase between FY16-FY19E


Exhibit 38: …leading to healthy PAT growth as well


Exhibit 39: …and causing gradual recovery in gross FATR


Fixed asset turns, RoCE and payout levels There has been a decline in Colgate’s fixed asset turns due to the

unprecedented capex investment amid a period of slowdown in demand. The company’s massive investments in fixed assets have meant that its payout

had declined in recent years.

8.8

9.0 12

.8

13.8

12

.3

15.2

15

.2

17.2

18

.1

19.1

20

.8

19.5

15

.7

14.2

17.6

16

.0

17.4

16

.0

15.3

15

.7

15.7

15

.9 19

.4

18.1

17

.3

17.5

17

.0

16.7

FY92

FY93

FY94

FY95

FY96

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

EFY

18E

FY19

E

Ad spends as a % of sales

5.3 5.9 6.7 6.8

8.3 9.6 10.6 12.8 15.1

5.2

11.4 13.6

1.8

22.2

16.2

10.4

20.6 17.4


EBITDA (INR b) EBITDA growth (%)

23.0

21.7 21.0

18.9

20.8

22.3 23.1

24.3 25.1


EBITDA margin (%)

4.0

4.5

5.0

4.9

5.6

6.0

6.5

7.9

9.4

-0.3%

10.9% 11.3%

-1.2%

13.9%

6.9% 8.5%

21.4% 19.1%


PAT (INR m) PAT growth (%)

3.8 4.3 4.6

3.6 3.1

2.6 2.4 2.6 2.9


Fixed Asset t/o (x)

Colgate

4 July 2016 24

Exhibit 40: High capex during the period of slowdown in demand had pulled down fixed asset turns…


Exhibit 41: …and also led to decline in payout levels in recent years, with lower capex, payout set to rise again


Colgate’s RoE and RoCE are still among the best in comparison to its FMCGpeers, but had come down from their earlier high levels and will graduallyrecover in FY18 and FY19 after hitting a trough in FY17.

Exhibit 42: Capex intensity led to decline in RoE…


Exhibit 43: …and RoCE both of which will recover


Despite continued healthy operating cash flows, free cash flows, while still significantly in the positive, had suffered during the period of high capex. We expect nearly 2x increase in OCF between FY16 and FY19 and nearly 4x increase in free cash flow levels over this period to reach INR9.2bn in FY19.

Exhibit 44: OCF generation remains healthy; FCF to follow suit once capex intensity abates


0.7 0.2 0.2 0.2

-0.3

1.1 0.5

0.9 0.9

3.6 2.9 3.0 3.0

1.0 1.0

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

E

FY18

E

FY19

E

Capex (INR b)

74 73 74 74

61

46

70 70 70


Dividend Payout (%)

113 109 107 90

82 67 60 66 73


RoE (%)

119 113 112

94 83

66 59

65 71


RoCE (%)

4.1 3.3

5.8 5.2 6.0 5.5

7.2 8.9

10.2

3.6 2.4

4.9

1.6 3.1 2.5

4.2

7.9 9.2


OCF (INR b) FCF (INR b)

Colgate

4 July 2016 25

Comments from recent management meet with the India business CEO and CFO on GST impact . The implementation of GST will help create an efficient distribution system, but

could also add to near-term costs. GST will aid in consolidation of warehouses. Colgate will invest the benefits from

GST into improving its business infrastructure.

Exhibit 45: Exhibit 45: Valuation matrix of coverage universe (Colgate appears to be wrong)

Company Reco Price Mkt Cap EPS Growth YoY (%) P/E (x) EV/EBITDA (x) RoE (%) Div. (%)

(INR) (USD M) FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY17E FY18E FY16 FY16

Consumer Asian Paints Neutral 1,002 14,273 25.0 15.8 11.3 54.1 46.7 41.9 36.1 31.2 27.9 34.4 1.0

Britannia Buy 2,804 4,992 41.9 21.6 15.2 41.4 34.0 29.5 28.2 23.5 19.4 54.6 0.9

Colgate Buy 925 3,736 6.9 8.5 21.4 42.1 38.8 32.0 26.7 23.4 19.2 66.8 1.1

Dabur* Neutral 311 8,114 17.5 15.5 13.8 43.6 37.7 33.1 35.2 30.3 26.8 33.6 0.8

Emami* Buy 1,155 3,890 16.7 15.5 19.5 46.3 40.1 33.5 38.9 32.0 26.8 39.9 0.7

Godrej Cons. Neutral 1,622 8,197 26.1 22.3 15.1 48.2 39.4 34.3 36.7 29.2 26.1 23.9 0.6

GSK Consumer Buy 6,057 3,781 17.7 9.7 14.7 37.1 33.8 29.5 27.3 24.5 20.5 29.9 1.1

Hind. Unilever Neutral 898 28,845 6.1 11.7 13.9 47.6 42.7 37.4 33.1 29.7 26.1 112.5 1.9

ITC Buy 252 45,219 2.5 13.4 14.3 20.5 18.1 15.9 13.0 11.6 10.3 30.9 3.1

Jyothy Labs Buy 300 806 24.2 -6.7 12.4 34.4 36.8 32.8 26.4 23.5 20.8 19.2 1.3

Marico* Neutral 267 5,120 23.7 14.6 16.6 48.6 42.4 36.4 32.2 28.5 24.3 36.2 1.2

Nestle Neutral 6,507 9,314 -7.3 -10.7 18.4 54.3 60.8 51.3 38.2 34.6 28.8 40.9 0.7

Page Industries Buy 14,060 2,328 21.0 25.0 31.3 66.1 52.9 40.3 41.3 33.5 25.9 46.9 0.6

Pidilite Inds. Buy 720 5,478 46.6 13.9 17.4 48.5 42.6 36.3 30.5 26.0 22.1 29.9 0.6

P&G Hygiene Buy 6,259 3,016 19.8 12.0 19.7 49.1 43.8 36.6 32.7 28.1 22.7 31.2 1.0

Radico Khaitan Buy 93 182 -2.6 14.7 21.0 14.3 12.5 10.3 10.1 8.7 7.5 9.3 1.0

United Spirits Buy 2,568 5,540 LP 88.9 49.9 118.3 62.6 41.8 44.8 33.8 25.2 25.8 0.0

Note: For Nestle FY16 means CY15 Source: MOSL, Company

Exhibit 46: P/E (x) ratio has slipped substantially in the past year


Exhibit 47: P/B (x) is among the lowest levels witnessed in the past decade


After the fall in the stock price of over 16% from its peak of INR 1,099 in April 2015, Colgate, on a P/E basis, is trading at a discount to MNC FMCG peers like HUL, PGHH and Nestle and in line with most domestic peers, despite stronger earnings growth potential in the long term and best of breed return ratios compared to peers.

35.0

26.3

35.8

28.8

10

20

30

40

50

Jun-

01

Aug-

02

Oct

-03

Dec

-04

Feb-

06

Mar

-07

May

-08

Jul-0

9

Sep-

10

Nov

-11

Dec

-12

Feb-

14

Apr-1

5

Jun-

16

P/E (x) 15 Yrs Avg(x)5 Yrs Avg(x) 10 Yrs Avg(x)

23.2

20.8

28.1

26.5

0.0

9.0

18.0

27.0

36.0

45.0

Jun-

01

Aug-

02

Oct

-03

Dec

-04

Feb-

06

Mar

-07

May

-08

Jul-0

9

Sep-

10

Nov

-11

Dec

-12

Feb-

14

Apr-1

5

Jun-

16P/B (x) 15 Yrs Avg(x)5 Yrs Avg(x) 10 Yrs Avg(x)

Colgate

4 July 2016 26

The stock is trading at close to 10-year low on a P/B basis and a discount to its 5-year average PE of 36x. With earnings prospects likely to witness a strong uptick from FY18, and given Colgate’s stronger moats compared to peers, best of breed return ratios as well as strong free cash flow generation going forward, we target 36x June 2018 EPS (in line with 5 year average 1 year forward P/E), which gives us a target price of INR 1,090, 18% upside to the CMP. Dividend yield is also likely to increase to close to 2.6% by FY19.

Since listing in 1978, Colgate India has recorded a CAGR of 26% in returns to shareholders. With the category growth potential and Colgate’s strong position in the category, we expect healthy shareholder returns going forward as well.

Exhibit 48: Valuation versus EPS growth over 15 years


7.5 6.9

30.4 37.7

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

EPS Growth (%) PE (x)

Colgate

4 July 2016 27

Financials and valuations

Income Statement (INR Million) Y/E March 2013 2014 2015 2016 2017E 2018E 2019E Net Sales 30,841 35,449 39,548 41,322 45,712 52,529 59,568 Change (%) 17.5 14.9 11.6 4.5 10.6 14.9 13.4 COGS 12,502 14,020 14,677 14,953 16,356 18,628 21,032 Gross Profit 18,339 21,429 24,871 26,369 29,356 33,902 38,536 Gross Margin (%) 57.8 59.6 62.4 63.4 63.7 64.1 64.3 Operating expenses 12,568 15,128 16,920 17,377 19,074 21,426 23,840 Other Operating Income 897 484 340 301 350 351 361 EBITDA 6,668 6,785 8,290 9,293 10,633 12,827 15,058 Change (%) 13.6 1.8 22.2 12.1 14.4 20.6 17.4 Margin (%) 21.0 18.9 20.8 22.3 23.1 24.3 25.1 Depreciation 437 508 750 1,114 1,317 1,450 1,525 Int. and Fin. Charges 0 0 0 0 0 0 0 Financial Other Income 399 358 264 416 361 463 567 Profit before Taxes 6,630 6,636 7,804 8,595 9,676 11,840 14,100 Change (%) 12.7 0.1 17.6 10.1 12.6 22.4 19.1 Margin (%) 21.5 18.7 19.7 20.8 21.2 22.5 23.7 Tax 1,766 1,683 2,009 2,620 3,193 3,966 4,724 Deferred Tax -103 47 205 0 0 0 0 Tax Rate (%) 25.1 26.1 28.4 30.5 33.0 33.5 33.5 Adjusted PAT 4,967 4,906 5,590 5,975 6,483 7,873 9,377 Change (%) 11.3 -1.2 13.9 6.9 8.5 21.4 19.1 Margin (%) 16.1 13.8 14.1 14.5 14.2 15.0 15.7 Non-rec. (Exp)/Income 0 492 0 -210 0 0 0 Reported PAT 4,967 5,399 5,590 5,765 6,483 7,873 9,377

Balance Sheet (INR Million) Y/E March 2013 2014 2015 2016 2017E 2018E 2019E Share Capital 272 272 272 272 272 272 272 Reserves 4,624 5,727 7,431 9,923 11,114 12,035 13,232 Net Worth 4,896 5,999 7,703 10,195 11,386 12,307 13,504 Deferred Liability -224 -178 26 217 217 217 217 Capital Employed 4,671 5,821 7,729 10,412 11,603 12,524 13,721

Gross Block 6,735 9,927 12,829 15,829 18,829 19,829 20,829 Less: Accum. Depn. -3,929 -4,368 -5,013 -6,374 -7,691 -9,141 -10,665Net Fixed Assets 2,807 5,559 7,816 9,455 11,138 10,688 10,163 Capital WIP 1,020 1,415 1,412 1,412 1,412 1,412 1,412 Investments 471 371 371 301 301 301 301 Curr. Assets, L&A 8,546 7,364 7,420 9,164 9,459 12,057 15,059 Inventory 1,853 2,257 2,522 2,927 3,343 3,721 4,194 Account Receivables 812 547 696 1,014 1,127 1,295 1,469 Cash & Bank 4,288 2,870 2,545 2,883 2,521 4,397 6,574 Others 1,593 1,690 1,657 2,340 2,467 2,644 2,822 Curr. Liab. and Prov. 8,172 8,889 9,290 9,920 10,707 11,934 13,214 Account Payables 4,666 5,100 5,144 5,519 6,044 6,885 7,772 Other Liabilities 2,510 2,837 2,874 3,016 3,167 3,325 3,492 Provisions 995 952 1,272 1,385 1,495 1,724 1,950 Net Current Assets 374 -1,525 -1,870 -756 -1,247 123 1,845 Application of Funds 4,671 5,821 7,729 10,411 11,603 12,524 13,721 E: MOSL Estimates

Colgate

4 July 2016 28

Financials and valuations

Ratios

Y/E March 2013 2014 2015 2016 2017E 2018E 2019E Basic (INR)

EPS 18.3 18.0 20.6 22.0 23.8 28.9 34.5 Cash EPS 19.9 19.9 23.3 26.1 28.7 34.3 40.1 BV/Share 18.0 22.1 28.3 37.5 41.9 45.2 49.6 DPS 13.5 13.4 12.5 9.9 16.7 20.3 24.1 Payout % 73.6 74.5 60.6 46.0 70.0 70.0 70.0

Valuation (x)

P/E 45.0 42.1 38.8 32.0 26.8 Cash P/E 39.7 35.5 32.3 27.0 23.1 EV/Sales 6.3 6.0 5.4 4.7 4.1 EV/EBITDA 30.0 26.7 23.4 19.2 16.3 P/BV 32.7 24.7 22.1 20.4 18.6 Dividend Yield (%) 1.3 1.1 1.8 2.2 2.6

Return Ratios (%)

RoE 107.4 90.1 81.6 66.8 60.1 66.5 72.7 RoCE 111.6 93.5 82.5 65.9 58.9 65.3 71.5 RoIC -820.9 16,067.6 236.5 123.4 94.7 109.8 151.9 Working Capital Ratios

Debtor (Days) 9 5 6 8 8 8 8 Asset Turnover (x) 9.7 8.8 6.7 4.8 4.6 4.9 5.0

Leverage Ratio

Debt/Equity (x) 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Cash Flow Statement

(INR Million) Y/E March 2013 2014 2015 2016 2017E 2018E 2019E OP/(loss) before Tax 6,668 6,785 8,290 9,293 10,633 12,827 15,058 Int./Div. Received -399 -358 -264 -416 -361 -463 -567 Interest Paid 0 0 0 0 0 0 0 Direct Taxes Paid -1,766 -1,683 -2,009 -2,620 -3,193 -3,966 -4,724 (Incr)/Decr in WC 1,339 480 20 -775 129 506 455 CF from Operations 5,842 5,224 6,037 5,483 7,208 8,903 10,223

(Incr)/Decr in FA -930 -3,587 -2,898 -3,000 -3,000 -1,000 -1,000 Free Cash Flow 4,913 1,637 3,139 2,483 4,208 7,903 9,223 (Pur)/Sale of Investments 0 100 0 70 0 0 0 CF from Invest. -930 -3,487 -2,898 -2,930 -3,000 -1,000 -1,000

Change in Equity -149 -75 -38 -129 0 -526 -526 (Incr)/Decr in Debt 0 0 0 0 0 0 0 Dividend Paid -4,276 -4,221 -3,848 -3,145 -5,292 -6,426 -7,653 Others 702 1,140 422 1,059 722 925 1,134 CF from Fin. Activity -3,723 -3,156 -3,464 -2,215 -4,570 -6,028 -7,046

Incr/Decr of Cash 1,190 -1,418 -325 338 -362 1,876 2,177 Add: Opening Balance 3,098 4,288 2,870 2,545 2,883 2,521 4,397 Closing Balance 4,288 2,870 2,545 2,883 2,521 4,397 6,574 E: MOSL Estimates

Colgate

4 July 2016 30

COLGATE GALLERY

http://institution.motilaloswal.com/emailer/Research/CLGT-20160524-MOSL-RU-PG012.pdf



http://institution.motilaloswal.com/emailer/Research/FMCG-20160607-MOSL-RR-PG010.pdf

http://institution.motilaloswal.com/emailer/Research/FMCG-20160106-MOSL-RP-PG022.pdf

Colgate

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