Investors should book profit in Colgate given market share, margin worries

Despite higher spending on advertising, high competition in toothpastes could restrict meaningful recovery in lost market share and weigh on earnings

Expectations of an earnings boost from lower corporate tax rates and market share improvement following the appointment of the new managing director (Ram Raghavan from August 2019) had kept investor sentiment buoyant in Colgate stock. Shares of Colgate, as a result, had risen nearly 35 per cent during the three months period ending October 23. However, concerns on operating margins and market share recovery in its key toothpaste segment post September 2019 quarter (Q2) results, suggest that investors should tread with caution.

India’s largest toothpaste maker announced its Q2 results last Thursday and since then, the stock has lost 2.6