Brokerages see Baba Ramdev’s Patanjali as threat for Colgate products
Baba Ramdev’s Patanjali Ayurved has now caught the interest of top brokerages of which two have issued reports describing how the home-grown personal care company is gaining market share at the expense of multinational giant Colgate Palmolive India.business Updated: Jan 14, 2016 08:54 IST
After gaining the attention of private equity firms, Baba Ramdev’s Patanjali Ayurved has now caught the interest of top brokerages of which two have issued reports describing how the home-grown personal care company is gaining market share at the expense of multinational giant Colgate Palmolive India with a 75-year history.
Colgate has been the undisputed giant in oral care in India as its volume market share — the total number of product units it sells — shows. In the January-September period, this was 57.6%. That is now under threat from Patanjali, if the reports by Credit Suisse and IIFL are to be believed.
“Colgate’s volume growth has seen a significant drop in 2015-16, which is divergent from peers who are seeing steady volume growth,” said Arnab Mitra of Credit Suisse. “The key reason is the strong traction that Patanjali has gained in the category.”
According to Credit Suisse, the Patanjali brand already enjoys 4-5% marketshare despite limited distribution and in the next few years could hit double-digits.
The view is echoed by IIFL.
“Patanjali has already garnered more than 5% marketshare and we believe that as general/modern trade distribution ramps up, marketshare would further increase to 13% by 2019-20. We estimate the highest impact on Colgate as Patanjali is gaining substantial traction in oral care,” said Percy Panthaki of IIFL Institutional Equities.
Shares of Colgate Palmolive have fallen 5.6% in the past month, much sharper than the 1.2% fall in the broader Sensex.
Colgate and Patanjali didn’t respond to requests for comment.
“The biggest disruption that has happened in the recent past is Baba Ramdev,” Marico chairman Harsh Mariwala said recently.
Incorporated in 2006, Patanjali clocked a turnover of Rs 2,000 crore in 2014-15, and Baba Ramdev recently said they will end 2015-16 with Rs 5,000-crore revenue.
Panthaki of IIFL said by 2020 Patanjali could derive almost 39% of its turnover from marketshare gains from listed FMCG players across categories. It could reduce 2019-20 cumulative sales of companies by Rs 7,900 crore, he added.
First Published: Jan 14, 2016 08:44 IST