The Hindu Business Line : Colgate ends strong on funds' buying

According to market sources, the stock attracted some institutional buying. It is part of the sectoral attention that the FMCG stocks got today, a dealer in an institutional brokerage house said.

Market apprehensions in the recent past over a drought like situation in central India and some parts of western region might be little overdone.

"The market seems to be trying to grapple with the future numbers which may follow deficiency in rain and the geographical extent of it," a fund manager said.

"Mild doses of value buying in agriculture surplus dependant FMCG sector may be guided by an estimate that the crop will not fail in large parts of India due to lack of rain or floods," a sector analyst observed.

According to Mr Gaurav Dua of Anagram Stockbroking, Colgate-Palmolive, which recorded a 22.9-per cent jump in net profit in the Q1 to June 30, 2004, better than many FMCG companies, is on a sound footing.

"Marketmen view the prevailing scenario as a good strategic opportunity for Colgate to increase market share through ad-spend, while intensity of competition is being felt by the bigger players in the field," he added.

In the portfolio churning within the sector, the Colgate Palmolive stock is benefiting, sources suggest. "In the preference list of the portfolio managers, it has, of course, moved up a few notches recently," another fund manager confirmed.

The company is setting up a new toothpaste unit in Himachal Pradesh to meet the anticipated volume growth and to avail itself of the excise duty exemption. New products such as "New Superior" dental cream, "Herbal White" toothpaste, "Navigator Plus" toothbrush and a range of aroma therapy personal care items reportedly have fared well in the domestic market in the past quarters.

The stock today closed at Rs 142.15 with a volume of 1.69 lakh shares on the BSE. On the NSE, it closed at Rs 142.75 with a volume of 3.35 lakh shares.