Colgate-Palmolive (India) Ltd. share price target

For Q3FY25, the revenue increased to 4.7% YoY (-9.7% QoQ) to INR 14,618 Mn, which missed our estimate by 3.9%. The company YoY growth, driven by toothpaste sales which showed mid-single digit volume growth.

With an upside 6% from the CMP, we maintain our HOLD rating on the stock.

In FY24 and 1HFY25, CLGT achieved revenue growth of 9% and 11%, outperforming FMCG peers (refer to Exhibits 1/2). Volume growth remained flat in FY24 but improved to 7% in 1HFY25.

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

For Q2FY25, the revenue increased 10.1% YoY (+8.2% QoQ) to INR 16,191 Mn, which is in line with our estimates of 0.8%. The YoY growth was led by high single-digit volume.

With a downside of -2% from the CMP, we recommend a HOLD rating to the stock

Colgate-Palmolive (India)’s (Colgate’s) Q2FY2025 numbers were mixed with revenue coming in line with expectations, while margins missed mark owing to higher advertising spends. Revenue grew by 10% y-o-y while OPM fell by 206 bps y-o-y leading to lower PAT growth at 3.9% y-o-y.

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.

Q1FY25, CLGT reported total revenue from operations of INR 14,967 Mn (+13.1% YoY, +0.4% QoQ), which beat our estimate by 4.3%. The YoY growth was led by high single-digit volume.

we have a HOLD rating to the stock.

Colgate (CLGT) delivered a 13% YoY revenue growth to INR15b (est. INR14.4b) in 1QFY25. Volume growth spiked at a high-single digit (flattish in the previous four quarters).

For Q4FY24, CLGT reported revenue of INR 14,900 Mn (+10.3% YoY / +6.8% QoQ), about in-line with our estimates. Domestic revenue grew by 10.7% YoY.

With a limited upside potential from the CMP, we ascribe a HOLD rating to the stock.

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.

While Colgate’s revenue and profit growth beat peers (price/mix +8%, volumes +2%, albeit on a low base), it's still underwhelming. At ~70% gross margin and >35% adj. EBITDA margin, it is over-earning, though the basic product (white toothpaste with the highest salience in its portfolio) is a functional product.