Colgate-Palmolive (India) Ltd. share price target

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

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

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.

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

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.

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 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).

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

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.

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.

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

Pricing Led the Growth: Q2FY24 results were ahead of our estimates. The company's revenue grew by 6.1% YoY (Domestic sales grew by 6.6%), while volume stood flat