Neutral Colgate; target of Rs 3150: Motilal Oswal

Motilal Oswal recommended Neutral rating on Colgate with a target price of Rs 3150 in its research report dated July 29, 2024.

Broker Research

July 31, 2024 / 12:10 IST

Neutral

26 Aug, 2025 12:21

Volume

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Motilal Oswal's research report on Colgate

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). The rural market continued to display positive signs of demand recovery, and it is growing ahead of urban. HUVR reported mid-single digit revenue growth in oral care in 1QFY25. Gross margin continued to expand, up 220bp YoY to 70.6%, aided by moderating RM prices, cost savings, and price-led growth. In line with the industry trend, A&P spending was high at 10% YoY. Despite this, EBITDA margin expanded 240bp YoY to 34%. EBITDA jumped 22% YoY to INR5.1b.Product innovations and marketing efforts have enabled CLGT to achieve volume growth in 1QFY25. While price hikes have contributed to overall growth in FY24, the positive volume trend indicates a promising outlook. It will be important to monitor if this momentum sustains throughout FY25.

Outlook

We believe it will be challenging for CLGT to expand its operating margin level. The current valuations at 56x/52x P/E on FY25E/ FY26E capture most of the near-term triggers. We reiterate our Neutral rating on the stock with a TP of INR3,150 (based on 50x Jun’26E EPS).

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