Sell

We maintain REDUCE on Britannia, with a Sep-26E TP of Rs5,750, on 48x P/E (in line with its last 5Y average forward P/E). Q2 net sales grew at ~4%, 1%/4% below our estimate/consensus expectation.

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 maintain REDUCE, lowering our Jun-26E TP by 6% to Rs5,500, based on 48x P/E (revised from 50x, now aligned with the 5Y average forward P/E). Q1 results were in line, adjusting for the Phantom Stock Option Scheme expenses.

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 Britannia with unchanged Mar-26E TP of Rs5,500, on 48x P/E (in line with its last 5Y forward average P/E). With improvement in macro trends, the management is reasonably optimistic about the sector recovery.

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 retain REDUCE on Nestlé India and Mar-26E TP of Rs2,300, on 60x P/E. We see demand stress persisting in a major part of the portfolio, with demand for milk products continuing to see impact of healthy price hikes (amid inflation) and competitive pressure in prepared dishes.

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.

Compared to consensus, there was a beat on sales at 1% and on EBITDA at 6%. EBITDA beat on lower SG&A as a % of sales

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.

PSL reported modest results in 2QFY25, impacted by inflationary pressures. Significant inflation in palm oil, coupled with increased duties in September, is anticipated to negatively impact 3Q FY25.

We downgrade Britannia to REDUCE from Add, cutting Sep-25E TP to Rs5,200 from Rs6,750 earlier.

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.

We downgrade Nestlé India to REDUCE from Add with a 14.3% cut in TP to Rs2,400 amid sustained topline pressures.

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.