Colgate-paalmolive shares: The shares of Colgate-Palmolive (India) Limited saw a sharp decline of 6% on 22 May today. This is the biggest intraday decline in the company’s shares in the last about 5 years. The decline came after the company’s weak results of the January-March quarter. At the same time, the company’s stock has also gone below the level that the American brokerage Goldman Sachs firm fixed as its downside target.
Goldman Sachs has rated the shares of Colgate-Palmolive (India) Limited ‘Sell (Sell)’ and fixed a target price of Rs 2,630 for this.
Weak quarterly performance
Goldman Sachs said the fourth quarter performance of Colgate-Palmolive was weaker than his expectations. The company’s revenue saw a decline of 1.8% on an annual basis, which was 3% lower than brokerage estimates. At the same time, the operating profit (Ebitda) saw a decline of 6%. However, it was 5% better than brokerage estimates.
Pressure on profit, margin decreased
The company’s Ebitda margin fell by 1.70 per cent, while the gross margin increased by 1.30 per cent. According to Goldman Sachs, the decline in the Ebitda margin occurred due to three major reasons- an increase of 0.60 per cent, an increase of 1 per cent in advertising expenses and 1.30 per cent increase in other expenses.
All these expenses have increased in proportion to the sales of the company, which has led to a negative impact of profitability. Brokerage believes that the competition has increased considerably in oral care business at present, which may affect the company’s margin expansion strategy.
Sharp decline in share
Colgate’s stock fell 5.8% to ₹ 2,503.6 at Intrade Low during trading on Thursday. Around 10:20 am, the stock was trading at a price of Rs 2,512 with a decline of 5.5%. This year, the company’s shares have been almost flat.
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