Understanding Colgate

Understanding Colgate.

  • Colgate’s major revenue comes from Toothpaste and then selling Toothbrushes.
  • Colgate is the clear market leader in Toothpaste segment with 55%+ share. However in recent times its slightly losing grip, might be because of entry of new players like Patanjali. Recent volume growth has declined to low single digit number.
  • It makes Gross profit of around 40%. Advertising & Sales Promotion is its major expenses, around  28% of sales. In recent times, it is making profit of around 14-15% (NPM).
  • It has no debt and gets good financing from creditors, on account of which its able to generate sales 4-6 times of  the Equity.
  • Earlier, all the cash that it use to generates from operation, was paid in dividend, now from last couple of years they are also using a portion for investing in fixed assets.
  • Looking at 7 years data, one can say – its a good company in bad times.

 

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