Shares of Colgate Palmolive jumped 6 percent in trade on July 27, post robust Q1 results as the household and personal products company performed better then street estimates. At 12:10 pm, the Colgate Palmolive stock was trading 5.76 percent higher at Rs 1,990 on BSE.
The oral care company has recorded a 10.6 percent year-on-year growth in revenue from operations at Rs 1,323.67 crore for quarter ended June FY23, with domestic sales growth at 12.3 percent and toothpaste sales rising double-digit. Profit grew by 30.5 percent to Rs 273.7 crore compared to year-ago period, backed by strong top line and operating performance.
Brokerage Views
Brokerage firm Emkay Global has assigned a ‘sell’ rating to the Colgate Palmolive stock with a target price of Rs 1720 in a report dated July 27, 2023. While the brokerage said that that the first quarter numbers were better than expected, it cited expensive valuations and restricted diversification in the business as the reasons for its bearish view.
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“We attribute the strong Q1 show to steady price-hikes, relaunch of Colgate Strong Teeth, low base effect, and one-offs in other expenses. We expect the 22-Aug-2023 Analyst Meet to grant a better perspective on Q1FY24 results. We bump up our FY24-26E earnings by ~4 percent. Based on this, along with higher valuation multiple of 35x (vs 33x earlier), we raise Jun-24E TP to Rs1,720 (Rs1,560 earlier); retain sell.”
Centrum Broking on the other hand has also given a ‘sell’ rating to the stock in a report dated July 26, 2023 with a target price of Rs 1655 signifying a potential downside of 12 percent in the stock from the current market price.
Whereas Diwakar Rana, Senior Research Analyst, Prudent Equity on Colgate Palmolive's most recent results stated that, "Colgate reported substantial numbers with both sales and PAT growth of 10.7 percent and 30.5 percent, the company’s toothpaste sales recorded high double-digit growth and domestic sales grew at 12.3 percent."
"The company’s newly joined CEO Prabha Narasimhan has worked in leadership roles in the FMCG giant Hindustan Unilever. The goal of the company under her leadership will be to drive volume growth and grow the oral care category. Also, the company has launched two products that have received a good response from customers. Since November 2021, the company has been a part of our Retirement Nest and has given our investors close to 40 percent returns. We think the company's growth, which is currently picking up, still has a long way to go."
Stock Performance
Colgate Palmolive stock has given a return of 37.81 percent over the last six months. Thus, has considerably outperformed the benchmark Nifty50 index which has given a return of 12.10 percent over the same duration.
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