Narasimhan will be the first MD hired externally in the past 12 years.
In 2010, Mukul Deoras from HUL was hired by the company’s US-based parent, who went on to become MD of Colgate-Palmolive (India) in 2010.
The appointment of Narasimhan from an external source, in place of an internal elevation suggests Colgate is looking to regain market share in the India business, said Nomura India.
“With market-share gains limited due to elevated competitive intensity (largely from the ayurvedic/naturals segment and HUL stepping up new launches with new formulations), we believe a fresh perspective from outside can bring in cross-pollination of fresh ideas and strategies from other consumer categories,” it said.
Nomura has a neutral rating on the stock with a target of Rs 1,700. Many others have a ‘hold’ rating on the stock.
HUL is seen as one of the best hiring grounds for not just FMCG companies, but most consumer facing sectors, Edelweiss said. It noted that Godrej Consumer Products had a few quarters ago hired Sudhir Sitapati from HUL, following which the stock had got sharply re-rated, before coming off.
Colgate stock stood at Rs 1,494.55 on Friday, down 0.18 per cent.
Edelweiss said appointing MD and CEO outside of the company shows renewed aggression by Colgate to try new initiatives.
“We are seeing a marked scale-up in new launches (premium toothpastes, smart brushes) by Colgate in the past few quarters.Colgate is going through a paradigm shift to premiumize, moving from oral care to oral beauty. It is now expanding its Palmolive range; building a second growth driver (face care lines),” the brokerage said while suggesting a ‘hold’ rating on the stock.
Colgate’s MD, Ram Raghavan will continue as India MD till April 15, 2022. Raghavan has been promoted to the parent company as President, Enterprise Oral Care, Colgate India and will be based in New York.
“We are yet to understand who will be the Interim MD for the four and half months spanning April 15 to August-end (will be guided by senior management and board). Also, Raghavan has had a very short stint of just 2 years 8 months. The earlier MD, Issam Bachaalani held the position for 5 years,” Edelweiss said.
Invesco said Narasimhan’s appointment will bring optimism on more aggression in oral care and a possibility of a product portfolio beyond oral care.
It noted that no CEO has materially increased focus on the non-oral side of the business so far. This brokerage has a ‘hold’ rating and a target of Rs 1,726 on the stock.
