26 November 2019
Update
| Sector:
Consumer
BSE SENSEX
40,821
S&P CNX
12,038
Colgate
Buy
CMP: INR1,488
TP: INR1,815 (+22%)
Poised for strong earnings growth over medium term
Inexpensive valuations bolster upside potential
Stock Info
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
CLGT IN
272
404.8 / 5.7
1641 / 1096
-7/26/9
654
49.0
Financials Snapshot (INR b)
Y/E March
2019 2020E 2021E
Sales
44.6
47.3
53.8
EBITDA
12.4
12.4
15.2
Adj. PAT
7.5
8.2
10.2
Adj. EPS (INR)
27.4
30.1
37.5
EPS Gr. (%)
8.8
9.9
24.5
BV/Sh.(INR)
53.2
50.8
46.5
RoE (%)
50.1
57.9
77.1
RoCE (%)
47.9
54.2
71.6
P/E (x)
54.3
49.4
39.7
P/BV (x)
28.0
29.3
32.0
Shareholding pattern (%)
As On
Sep-19 Jun-19 Sep-18
51.0
51.0
51.0
Promoter
11.6
10.5
13.3
DII
15.5
15.1
13.3
FII
22.0
23.4
22.4
Others
FII Includes depository receipts
Stock Performance (1-year)
Colgate-Palm.
Sensex - Rebased
1,700
1,525
1,350
1,175
1,000
We recently met Colgate’s (CLGT) management to understand its strategy to
drive growth amidst changing market dynamics. Key highlights:
CLGT’s market share has been stable over the past few quarters.
Volume growth and market share expansion have taken precedence as part
of its new strategy, even if it is at the cost of near-term profitability.
Direct reach has increased by 30% over the past year.
Good Rabi crop may not necessarily translate into a significant boost for
FMCG sector volumes. It may take rural growth at par with urban growth.
Anything additional will be a bonus.
Premiumization is back in focus. No material downtrading is happening
either.
No material capex required until Dec’22.
In our
note
post the corporate tax cut, we had included Colgate (CLGT) among
our top picks. In another
note
on CLGT earlier this month, we had examined
past instances among Indian MNCs where management change heralded a
significant change in the strategy for the better. We remain bullish on CLGT
from the medium-term perspective, given its reasonable valuations (39.7x
FY21E EPS – a huge discount to MNC peer multiples of 50x-56x), likely
escalation in earnings momentum and sharp potential improvement in the
already impressive RoCE. Targeting 45x Sep’21E, we maintain our target price
of INR1,815 with a Buy rating.
Stable market share over past few quarters
It was important for CLGT to arrest the hemorrhage in the toothpaste market
share before resuming the growth path. In that regard, the company has done
well over the past few quarters to maintain a stable market share of 51%-52%
(although still below the peak of ~58%), led by:
Launch of a host of herbal products
like Cibaca Ved Shakti and Swarna Ved
Shakti, as well as the recently launched Charcoal toothpaste. This apart, it
has a strong pipeline of products awaiting launch in both the herbal and
non-herbal categories.
Slowdown in growth of herbal
from ~30% YoY to mid-teens now. CLGT’s
market share in herbal is around one third and therefore sharp growth in
the salience of the category (now 25-30% of toothpaste market sales)
impacted its overall market share.
Direct distribution reach
which reportedly expanded by 30% over the past
year. At a time when wholesale trade (both rural and urban) is facing
pressure, this move would have helped arrest the hemorrhage and is likely
to aid growth in market share. While management did not share the
number, we believe that CLGT’s direct reach now equals or exceeds 2m
outlets, making it the third company apart from HUVR (~3m outlets) and
more recently Britannia (~2.1m outlets) to attain that figure.
Krishnan Sambamoorthy – Research analyst
(Krishnan.Sambamoorthy@MotilalOswal.com); +91 22 6129 1545
Research analyst: Dhairya Dhruv
(Dhairya.Dhruv@motilaloswal.com); +91 22 6129 1547 |
Pooja Doshi
(Pooja.Doshi@MotilalOswal.com); +91 22 5036 2689
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.
 Motilal Oswal Financial Services
Colgate
Adspends and promotion spends increased steeply by 20% in 2QFY20 after
the arrival of the new MD in Aug’19 (+250bp YoY as a percentage of sales in
2QFY20). The company re-launched Colgate Dental Cream, Colgate Max
Fresh with Cooling Crystals, and there has been a lot of communication on
the mother brand of late. ‘Saver packs’ are now a year-round phenomenon
rather than occasional earlier. Even INR10 toothpastes come with a brush
now.
Revival in both premium and mass end (Colgate Cibaca)
augurs well for
CLGT, in our view. The premium segment of the market was hurt amidst
sharp growth in the salience of the natural segment, but this has changed
over the past few months. From 8% of the oral care segment, the premium
segment had slipped to 3-4% but is moving back to mid-to-high single-digits
(at ~6% now). Similarly, growth at Colgate Cibaca – the company’s value
product – is recovering. Market share for CLGT is higher in these two
segments compared to naturals.
Clearly articulated strategy on volume growth, market share expansion
After achieving some stability in market share, the new MD, Mr. Ram
Raghavan’s aim is to expand it further – even if it is at the cost of near-term
profitability.
While we believe that oral care category volume growth on a steady state basis
will be in single digits, CLGT has the potential to claw back some of the market
share that it had lost over the past four years as a result of this renewed focus
and also the aforementioned factors.
Revival in premiumization bodes well for realization growth, which was hurt
over the past 3-4 years partly on account of the surprising decline in the salience
of the premium segment amidst the onslaught of herbal. Absence of significant
downtrading even in the slowdown also augurs well for realization growth.
Volume growth recovery to be gradual
Demand has neither revived nor slipped in recent months compared to 3-4
months ago.
According to management, the expected good Rabi sowing (on account of
above-normal monsoon) may not materially alter the demand scenario in rural
India for the FMCG sector. At the most, it expects rural growth – which had
slipped below urban growth over the past two quarters – to come at par but not
surpass urban growth, at least in the next few quarters. This is in contrast to the
scenario three quarters ago when rural growth was well above urban (1.3x
urban growth) and driving overall growth for the sector.
Oral care usually recovers with a lag after sector recovery. Management expects
mid-single-digit volume growth for the full year. We assume 5.5% volume
growth for FY20.
Corporate tax cut benefits yet to be passed on
Management has not yet passed on the benefit of corporate tax cuts either in
the form of price reductions or adspends. In our view, CLGT is waiting for some
revival in demand before going the whole hog on adspend/promotion.
26 November 2019
2
 Motilal Oswal Financial Services
Colgate
Notably, CLGT was expected to pay taxes at a rate of ~33-34% for FY20 and FY21
before the announcement of the corporate tax cut by the government. Thus,
corporate tax cuts will add INR850-1,150m to its profits.
As mentioned in our
note
released after the announcement of the corporate tax
cut, we need to assess the second-order effects of this measure. This includes
the impact on (1) relative basis (v/s peers) in categories where the company
operates and (2) absolute profit and absolute savings v/s peers. In our view,
CLGT is well placed on both these fronts, given that Dabur and Patanjali will not
see any material gains from the corporate tax cuts. CLGT can spend a significant
part of INR850-1,150m incremental PAT by way of promotions/price-offs in an
attempt to gain market share. Two points are important here:
(a) Gain further
share or lead to further bleeding of peers:
None of its competitors would have
such windfall gains, and if they choose to match CLGT’s efforts on promotions
and price-offs, they would end up bleeding further.
(b) Utilize/institutionalize
multi-year benefit over peers:
Importantly, the corporate tax cuts offer multi-
year benefits to CLGT, providing it with incremental benefit every year until
competitors scale up well.
No material capex until end-2022
CLGT cited it does not require significant incremental capex until Dec’22. This
means that capex will be low until end-FY23.
As mentioned in our recent
note
(where we looked at the similarities between
CLGT and other MNCs), CLGT had created significant capacity over FY14-17
before the onslaught of herbal players, which delayed capacity utilization pick-
up. Even if volumes for Colgate were to recover to high-single-digits (assuming
some market share recovery) from low-to-mid single-digits, PAT growth will be
much higher than EBITDA/revenue growth – as was witnessed in Nestle’s case
recently when it finally got the strategy right and was able to reap the benefits
of massive capacity expansion earlier.
Comments on competition
Management believes that Patanjali has not been gaining share recently.
Dabur has started doing well in south and west India (traditionally weak
geographies for that company) with Dabur Red.
Lever Ayush has not made any material dent in oral care even in south India.
Non-oral care growth
While the focus now is on reviving growth in oral care, management is clear that
non-oral care will play an important part in driving incremental sales growth
over the medium-to-long term. CLGT already has over six million outlets (direct
reach of two million, in our view) and once it sets the house back in order in
terms of oral care, the company will be aggressive given its ability to piggyback
on the existing distribution reach. In our view, CLGT will strategize well to not
get into the mass market soaps/detergents businesses.
Non-oral care is only ~2-3% of sales in India compared to half of global sales for
the parent. According to management, while oral care will continue to be by far
the largest chunk of sales in India, non-oral care could be a double-digit sales
contributor over the next 10 years.
3
26 November 2019
 Motilal Oswal Financial Services
Colgate
Exhibit 1: While management has not shared latest figures
toothpaste market share has been stable of late…
Colgate's toothpaste market share (%)
Exhibit 2: ….and market share has expanded in
toothbrushes
Colgate's toothbrush market share (%)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 3: Ad spends rose sharply YoY in 2QFY19
Ad spends YoY growth (%)
43.8
26.5
16.5
8.9 5.4
4.4
-0.5 0.1
-7.9 -6.8
Exhibit 4: Ad spends as % of sales have been increasing over
the past three quarters
Ad Spend as % of sales (%)
13.9 14.7
9.6
13.1 13.8
13.5 13.9 14.4
-47.1
-27.3
11.0 11.7
11.9 11.5
Source: Company, MOSL
Source: Company, MOSL
Exhibit 5: CLGT’s toothpaste volume growth expected to be
in mid-single-digits in FY20
Toothpaste volume growth (%)
Exhibit 6: Over FY14-17, CLGT incurred significantly higher
capex as % of sales than other consumer companies…
Capex as % sales (FY14-17)
Source: Company, MOSL
Source: Company, MOSL
26 November 2019
4
 Motilal Oswal Financial Services
Colgate
Exhibit 8: Higher capex over FY14-17 and weak earnings led
to higher depreciation as % of EBITDA
Depreciation/EBITDA (%)
11.9
2.1
1.5
1.0
1.0
1.5
1.0
6.7
6.6
7.5
9.0
14.1 14.1
12.9
14.0
Exhibit 7: …thus, capex until FY23 is expected to be low
Capex (INR b)
3.2
3.0
3.2
2.7
12.1
Exhibit 9: Expect muted sales growth in FY20 before
potentially strong recovery in FY21
Sales (INR b)
17.6% 17.5%
13.2%
11.0%
2.9%
-3.0%
27.0 31.7 35.9 39.9 38.7 39.8 41.9 44.6 47.3 53.8
5.2% 6.6% 5.9%
Sales growth (%)
13.8%
Exhibit 10: Expect flat EBITDA in FY20 because of higher
adspends before growth in FY21
EBITDA (INR b)
22.2
11.4
13.6
1.8
5.9
6.7
6.8
8.3
9.4
13.2
0.5
9.4
EBITDA growth (%)
18.0
11.0
0.7
11.1 12.4 12.4 15.2
22.4
Exhibit 11: Expect EBITDA margin to expand 60bp over FY19-
21
EBITDA margin (%)
26.6
24.3
21.7
21.0
18.9
20.8
23.7
27.7
28.3
26.3
Exhibit 12: Expect PAT growth to be higher than EBITDA
growth in FY20 and FY21
PAT (INR m)
13.9%
-1.2%
PAT growth (%)
18.6%
9.6%
-5.7%
8.8% 9.9%
24.5%
10.9% 11.3%
4.5
5.0
4.9
5.6
6.1
5.8
6.9
7.5
8.2
10.2
Exhibit 13: Colgate Palmolive P/E (x)
P/E (x)
Min (x)
58.0
46.0
34.0
22.0
10.0
22.2
Avg (x)
+1SD
Max (x)
-1SD
45.8
42.9
Exhibit 14: Consumer sector P/E (x)
P/E (x)
Min (x)
52.0
42.0
32.0
22.0
12.0
39.5
33.7
27.9
22.3
Avg (x)
+1SD
Max (x)
-1SD
45.7
39.5
42.6
36.1
29.6
Source: Company, MOSL
Source: Company, MOSL
26 November 2019
5
 Motilal Oswal Financial Services
Colgate
Financials and Valuations
Income Statement
Y/E March
Net Sales
Change (%)
COGS
Gross Profit
Gross Margin (%)
Operating expenses
EBITDA
Change (%)
Margin (%)
Depreciation
Int. and Fin. Charges
Financial Other Income
Profit before Taxes
Change (%)
Margin (%)
Tax
Tax Rate (%)
Adjusted PAT
Change (%)
Margin (%)
Non-rec. (Exp)/Income
Reported PAT
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Loans
Deferred Liability
Capital Employed
Gross Block
Less: Accum. Depn.
Net Fixed Assets
Capital WIP
Investments
Current
Non-current
Curr. Assets, L&A
Inventory
Account Receivables
Cash & Bank
Others
Curr. Liab. and Prov.
Account Payables
Other Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOFSL Estimates
2015
39,887
11.0
14,677
25,210
63.2
16,920
8,290
22.2
20.8
750
0
264
7,804
17.6
19.6
2,009
28.4
5,590
13.9
14.0
0
5,590
2015
272
7,431
7,703
0
26
7,729
12,829
-5,013
7,816
1,412
371
371
0
7,420
2,522
696
2,545
1,657
9,290
5,144
2,874
1,272
-1,870
7,729
2016
38,682
-3.0
14,763
23,919
61.8
14,534
9,385
13.2
24.3
1,114
0
395
8,666
11.1
22.4
2,541
29.3
6,125
9.6
15.8
-313
5,812
2016
272
10,038
10,310
0
97
10,407
14,866
-4,785
10,081
784
312
0
312
8,852
2,915
1,015
2,887
2,035
9,622
5,519
3,438
664
-770
10,407
2017
39,818
2.9
14,763
25,055
62.9
15,619
9,435
0.5
23.7
1,332
0
411
8,514
-1.8
21.4
2,740
32.2
5,774
-5.7
14.5
0
5,774
2017
272
12,466
12,738
0
275
13,013
17,188
-6,107
11,081
1,666
312
0
312
10,048
2,926
1,299
2,943
2,880
10,094
5,975
3,356
763
-46
13,013
2018
41,880
5.2
14,887
26,992
64.5
15,855
11,137
18.0
26.6
1,565
0
375
9,947
16.8
23.8
3,022
31.1
6,850
18.6
16.4
-117
6,734
2018
272
14,974
15,246
0
355
15,601
19,077
-7,617
11,459
1,586
312
0
312
12,282
2,267
2,010
4,562
3,443
10,037
6,203
3,040
794
2,245
15,601
2019
44,624
6.6
15,586
29,039
65.1
16,678
12,361
11.0
27.7
1,592
25
377
11,120
11.8
24.9
3,717
33.0
7,451
8.8
16.7
305
7,756
2019
272
14,196
14,468
777
309
15,553
21,077
-9,169
11,909
1,987
312
0
312
12,058
2,486
2,098
3,994
3,481
10,712
6,132
3,757
823
1,346
15,553
2020E
47,265
5.9
16,495
30,770
65.1
18,328
12,442
0.7
26.3
1,748
80
328
10,942
-1.6
23.2
2,754
25.2
8,188
9.9
17.3
0
8,188
2020E
272
13,550
13,822
777
309
14,908
22,618
-10,916
11,702
1,987
312
0
312
13,078
2,636
2,315
4,534
3,593
12,170
7,534
3,772
864
908
14,908
(INR M)
2021E
53,804
13.8
18,584
35,220
65.5
19,997
15,223
22.4
28.3
1,849
80
332
13,626
24.5
25.3
3,429
25.2
10,196
24.5
19.0
0
10,196
(INR M)
2021E
272
12,368
12,640
777
309
13,725
23,618
-12,766
10,852
1,987
312
0
312
13,020
2,971
2,343
3,994
3,713
12,446
7,703
3,836
907
575
13,725
26 November 2019
6
 Motilal Oswal Financial Services
Colgate
Financials and Valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout %
Valuation (x)
P/E
Cash P/E
EV/Sales
EV/EBITDA
P/BV
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Debtor (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
Cash Flow Statement
Y/E March
OP/(loss) before Tax
Depreciation
Int./Div. Received
Interest Paid
Direct Taxes Paid
(Incr)/Decr in WC
CF from Operations
(Incr)/Decr in FA
Free Cash Flow
Others
CF from Invest.
Dividend Paid
Others
CF from Fin. Activity
Incr/Decr of Cash
Add: Opening Balance
Closing Balance
E: MOFSL Estimates
2015
20.6
23.3
28.3
12.5
60.6
72.4
63.8
10.1
48.5
52.5
0.8
81.6
82.5
236.5
6
6.7
0.0
2015
7,804
750
97
-264
-2,055
49
6,382
-2,994
3,388
135
-2,859
-3,388
-460
-3,848
-325
2,870
2,545
2016
22.5
26.6
37.9
11.0
48.8
66.1
55.9
10.4
42.8
39.3
0.7
68.0
67.5
119.0
9
4.2
0.0
2016
8,666
1,114
-264
-261
-2,524
156
6,887
-2,713
4,175
12
-2,631
-2,987
-928
-3,915
342
2,545
2,887
2017
21.2
26.1
46.8
11.0
51.7
70.1
57.0
10.1
42.6
31.8
0.7
50.1
49.3
75.7
11
3.6
0.0
2017
8,514
1,332
34
-297
-3,014
311
6,880
-3,212
3,668
-205
-3,418
-2,717
-689
-3,406
56
2,887
2,943
2018
25.2
30.9
56.1
24.0
95.3
59.1
48.1
9.5
35.9
26.6
1.6
49.0
47.9
76.5
17
3.1
0.0
2018
9,947
1,565
81
-290
-3,474
-889
6,940
-2,087
4,853
564
-1,523
-2,986
-812
-3,798
1,619
2,943
4,562
2019
27.4
33.2
53.2
23.0
84.0
54.3
44.8
9.0
32.5
28.0
1.5
50.1
47.9
78.4
17
3.4
0.1
2019
11,121
1,592
85
-317
-4,144
1,494
9,830
-1,042
8,788
-1,209
-2,251
-6,462
-1,564
-8,147
-568
4,562
3,994
2020E
30.1
36.5
50.8
26.2
87.0
49.4
40.7
8.5
32.2
29.3
1.8
57.9
54.2
92.3
18
3.7
0.1
2020E
10,942
1,748
-328
80
-2,754
979
10,667
-1,541
9,126
1,732
191
-8,833
-1,484
-10,317
541
3,994
4,534
2021E
37.5
44.3
46.5
33.7
90.0
39.7
33.6
7.5
26.4
32.0
2.3
77.1
71.6
129.1
16
4.7
0.1
(INR M)
2021E
13,626
1,849
-332
80
-3,429
-207
11,587
-1,000
10,587
1,735
735
-11,379
-1,484
-12,863
-541
4,534
3,993
26 November 2019
7
 Motilal Oswal Financial Services
Colgate
NOTES
26 November 2019
8
 Motilal Oswal Financial Services
Colgate
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
< - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within following 30
days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations,
is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOFSL is a subsidiary
company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on www.motilaloswal.com. MOFSL
(erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National Stock Exchange of
India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for its
stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member
of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance
products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell
the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a
market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of
interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the
analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in
some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware
that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment
banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and
Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity
and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use
would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities
and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal
Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report
is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to
professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer
or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state
laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934
Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by
MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as
defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on
by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in
only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and
interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a
chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be
executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered
broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading
securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets services
license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First
Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising
from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of which some of whom may consist of
"accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the SFA”). Accordingly, if a Singapore person is not or ceases to be
such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and inform MOCMSPL.
Specific Disclosures
1 MOSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOSL has not received any compensation or other benefits from third party in connection with the research report
10 MOSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
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received compensation/other benefits from the subject company in the past 12 months
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Colgate
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific
recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there
might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider
demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not
considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research
analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and may not be
altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of MOFSL. The report is
based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from
publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made
as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not
constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers
simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or
in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be
used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report constitutes investment, legal,
accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this
report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This
may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at
an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to
determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including those involving futures,
options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied,
is made as to the accuracy, completeness or fairness of the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is
provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The
Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and
the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform
or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is
already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or
published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any
locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or
licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose
possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors, employees, agents or representatives shall be
liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not
to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses,
costs, damages,
expenses that may be suffered by the person accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad(West), Mumbai-
400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412. AMFI:
ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration
No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management Ltd. (MOWML): PMS (Registration No.:
INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond,
NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a group company of MOFSL. Private Equity is offered
through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory services is backed by proper research. Please read the Risk
Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee of the returns. Investment in securities market is subject to market risk,
read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National Company Law
Tribunal, Mumbai Bench.
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