Sell

Colgate’s Q2FY26 result reaffirms that business remains structurally fatigued, with no visible triggers for a turnaround. Revenue declined 6.2% YoY, implying a 7-8% volume decline amid GST-led destocking and continued competitive intensity.

We've been long critical of Colgate India's (consistent) strategy of not investing (enough) for toothpaste category growth (our opinion), not aggressive (enough) in diversifying outside of oralcare (parent has a good HPC portfolio though), over-earning, in our opinion (operating margins at ~37% after adding back royalty).

We retain REDUCE on Dabur India and keep our Mar-26E TP unchanged at Rs450, on 37x P/E, as we see weak business execution. The management, in consultation with McKinsey, has refreshed the company’s vision, with focus now on seven structural initiatives.

We recently downgraded Dabur to REDUCE, given its weak execution. Dabur, in its Q4FY25 business update, noted a mid-single-digit decline in the domestic business, which is a key business concern in our view.

GCPL has been a play on execution for a couple of years now. Our downgrade (to Reduce) after the Q3 business update factored in concerns on slowdown in/waning of execution.

Colgate’s ‘Investor Day’ showcased management effort toward driving category consumption and focus on enhancing consumer uptrade.

We reiterate our REDUCE call on Colgate due to a high base for growth delivery ahead. The company has executed well on oral care and consistently surprised the street with its performance.

Marico Bangladesh's 1QFY25 DPS of BDT100 was recorded on 25 Aug'24. This equates to ~30% of MB's cash/share on balance sheet

Marico Bangladesh (MB), operating in Household and Personal Care, accounts for 11% of MRCO's consolidated sales

We note that Marico’s thrust on enhancing its fundamentals is well captured by
the market. Renewed focus on distribution expansion, portfolio enrichment, and
enhancing margin is encouraging. However, valuations at FY26E P/E of 43x
capture the positives.

Our SELL call on Colgate has been a factor of limited visibility on earnings over
the medium term, given that high margin gets into the base and structural
growth remain elusive.

We have upward revised our FY21E and FY23E EPS estimates at Rs 9.5 (+13%) and Rs 9.8 (+0.8%) and introduced FY23E EPS estimates at Rs10.8. We value the stock at 48x FY23E EPS to arrive at a TP of Rs 520....