Colgate-Palmolive (India) Ltd. share price target

Colgate’s Q4FY25 performance was muted owing to soft demand in urban markets and heightened competitive intensity. Standalone revenues declined by 1.8% y-o-y to Rs. 1,463 crore, missing our expectation of Rs. 1,520 crore, with toothpaste volumes flat y-o-y.

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).

Cautious outlook for 1H26 due to muted urban demand, expect recovery led by innovations & rural momentum post 2Q. increased promotional spending led by heightened competitive intensity. Near term outlook is cautious given that 1) urban demand continues to remain muted at mass end 2) heightened competitive landscape 3) rising promotional...

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.

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.

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.

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.

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