Growth opportunities in India’s oral care market

This Toothpaste Company has been present in India since 1937. A relentless focus on brand building and a strong distribution advantage, has cemented the company’s dominant position of more than 50% market share over two decades – roughly 3x that of its nearest competitor.

We have been shareholders for many years in our Indian Subcontinent portfolios and as a dominant consumer franchise, we believe the company should benefit from India’s long-term growth trends especially with the low penetration rate of oral care products in India. The average Indian spends just US$1 on oral care products each year, compared to US$4 in China and US$11 in Brazil.

In addition, there is potential to capture consumption in other personal care categories, such as skincare, from which the parent company derives more than 20% of its sales. These products contribute to less than 2% of the company’s revenues currently.

The senior management team at the company is well-experienced across various markets. The current CEO has been with the company since 1997 and has previously run group’s businesses in China and Brazil. The combination of his local and global experience is high regarded.

Oral care market is highly under-penetrated in India

Steady market share and attractive Return On Capital Employed (ROCE) over 15 years

Source: Company presentation, FSSA Investment Managers, as at May 2021.

Disclaimer: Reference to specific securities (if any) is included for the purpose of illustration only and should not be construed as a recommendation to buy or sell the same.  All securities mentioned herein may or may not form part of the holdings of FSSA Investment Managers’ portfolios at a certain point in time, and the holdings may change over time.