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Stocks To Watch In 2023 | Will the 4-point strategy of Colgate's new CEO deliver?
CNBC-TV18 has compiled a list of the top 20 stocks to watch out for in 2023. It's a carefully curated list of companies that warrant a closer look in 2023 which consists of Maruti Suzuki, Apollo Hospitals, Reliance Industries Ltd (RIL), Oil and Natural Gas Corporation (ONGC), Bharti Airtel, LTIMindtree, PVR, Zee Entertainment, Orient Cement, Sagar Cement, Colgate, Container Corporation (CONCOR), HDFC Life, NTPC, Larsen and Toubro (L&T), Bajaj Finance Ltd, IDBI Bank, HDFC Bank, IDFC First Bank and Paytm. These are the companies which CNBC-TV18’s research team has on its radar. CNBC-TV18 puts out the names in detail one by one and will explain what could change and what the impact could be.
Packaged consumer goods company Colgate-Palmolive (India) reported its December quarter earnings on January 24. The company failed to beat street expectations and all metrics came below estimates. Colgate reported a profit of Rs 243.2 crore for the quarter under review, 8.2 percent below estimates. The company reported a profit of Rs 252.3 crore in the corresponding quarter in the previous year.
However, it is a stock to watch in 2023 as Prabha Narasimhan has taken over as its MD and CEO from September 2022, after 14 years of being in the country's largest consumer products company-- Hindustan Unilever Ltd (HUL).
She spelled out the roadmap for growth after taking over, and had the 4 key points in her plan.
One is to lead toothpaste category growth; second is premiumisation through science and innovation; third to lead category growth in toothbrush and devices and fourth is build the personal care business through organic and inorganic means.
Other than that, on expansion, the company is planning to set up a business-to-business platform called DentistFirst and is also keen on entering the kids' toothpaste category.
Also Read | Colgate's new CEO wants more Indians to brush regularly and change toothbrushes more often
Analysts said that the new growth strategy is in line with previous outlines. So the key thing to watch out for is its execution.
Colgate has been struggling in the past many quarters. Weak volume performance, market share erosion and muted quarterly performance had hurt the company.
However, in quarter three of FY23, the company has increased ad spends by 140 basis points (bps) of sales and has also announced a partnership with Andhra Pradesh government to start oral health awareness program.
The execution, needs to be monitored.
The stock has corrected about 14 percent from its 52-week high and it trades at 34x FY24 earnings.
Also Read | Colgate-Palmolive Q3 Results: Earnings fail to beat Street estimates, net profit declines 3.6%
The key risks and the reasons why the stock trades at a discount are slower than expected recovery and larger than expected market share decline.
The brokerage firm CLSA has given an underperform rating on the shares of the company with a target price of Rs 1,525 per share. Nomura gave a neutral rating on the company with a target price of Rs 1,550 per share. Axis Securities downgraded the rating to hold with a target price of Rs 1,550. Motilal Oswal does not expect earnings growth to resume strongly over the medium term and maintained a neutral call with a target price of Rs 1,565 and Citi maintains a sell call on the shares of Colgate with a target price of Rs 1,650/share.
For more, watch the accompanying video
Click the Top 20 Stocks tab to see CNBC-TV18’s research explain what to watch out for in these major players this year.
Disclaimer: This is not a recommendation list. The CNBC-TV18 editorial team does not advise on trading/investing in the stock market. Any investor/viewer is advised to carry out necessary diligence on their own or through a certified registered financial adviser for investment decisions.
(Edited by : CH Unnikrishnan)
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