This MNC whose brand name is almost the generic name for toothpaste in India, has done pretty well for itself for the first quarter ended 30th June 2009. YoY, net sales were up 19% at Rs.485.40 crore. Its business continues to be driven by toothpaste and it achieved a volume growth of 12% in this category. It now has a market share of 52.3%, which makes it the market leader in this segment. In the toothbrush category, volume market share has increased to 38.2% and in the toothpowder category to 48.8% in Q1FY10.
Net profit for the quarter was at Rs.102.8 crore, an increase of 43% on a YoY. The company has been working on reducing costs and this to a large extent has helped shore up the margins. Operating cost for current Q1 was at Rs.362.83 crore which was 75% of the net sales. As against this, in Q1FY09, operating cost was at Rs.341.50 crore, which was 84% of the net sales, clearly YoY there has been a reduction vis-à-vis the sales. Even sequentially, costs have been reduced, which in Q4FY09 was 80% of the net sales. This reduction is cost has been reflected in the margins – OPM was at 27.02% v/s 23.86% in Q1FY09 and NPM improved from 17.64% to 21.17%.
And the major cost reduction has come by way of reduction in advertising and sales promotion costs, which YOY was down 16% and has remained more or les flat on a QoQ at Rs.69.31 crore.
This is one of the best MNC stocks on the BSE. Apart from having a negligible interest outgo, reserves of over Rs.200 crore (as on 31st March 2009), this is one MNC, which is not dependent on the monsoon for rural India’s demand. Irrespective of the rains, the demand for toothpaste and tooth powder does not go down. Stay invested and one can accumulate for long term on declines.
Net profit for the quarter was at Rs.102.8 crore, an increase of 43% on a YoY. The company has been working on reducing costs and this to a large extent has helped shore up the margins. Operating cost for current Q1 was at Rs.362.83 crore which was 75% of the net sales. As against this, in Q1FY09, operating cost was at Rs.341.50 crore, which was 84% of the net sales, clearly YoY there has been a reduction vis-à-vis the sales. Even sequentially, costs have been reduced, which in Q4FY09 was 80% of the net sales. This reduction is cost has been reflected in the margins – OPM was at 27.02% v/s 23.86% in Q1FY09 and NPM improved from 17.64% to 21.17%.
And the major cost reduction has come by way of reduction in advertising and sales promotion costs, which YOY was down 16% and has remained more or les flat on a QoQ at Rs.69.31 crore.
This is one of the best MNC stocks on the BSE. Apart from having a negligible interest outgo, reserves of over Rs.200 crore (as on 31st March 2009), this is one MNC, which is not dependent on the monsoon for rural India’s demand. Irrespective of the rains, the demand for toothpaste and tooth powder does not go down. Stay invested and one can accumulate for long term on declines.
Source: www.premiuminvestments.in (By S P Tulsian)
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