Deven Choksey's research report on Colgate Palmolive India
Consolidated revenue stood at INR 14,625 Mn., down 1.8% YoY and remained flat sequentially. Revenue was sharply below our estimates (-9.2%) led by weaker toothpaste volume growth (stood at 4.0% YoY), impacted by urban demand. EBITDA for the quarter came in at INR 4,980 Mn., down 6.4% YoY (+9.6% QoQ), in line with our estimates. Sequentially EBITDA margin improved by 297bps (-166bps YoY) to 34.1%, aided by higher gross margins and positive operating leverage. Net profit stood at INR 3,550 Mn., down 6.5% YoY (+10.0% QoQ), above our estimates (+3.5%) led by better operational performance. We have revised our FY26E/FY27E EPS estimates by -1.2%/-2.8% respectively, factoring in persistent weaker urban demand, higher trade competitive intensity and, elevated operating expenses particularly in employee and brand investments. We expect Revenue/EBITDA/Adj. PAT to grow by 7.0%/ 7.7%/ 7.4% CAGR over FY25-27E.
Outlook
The company’s share price is currently trading at 44.8x/40.8x its FY26E/FY27E EPS. We value Colgate Palmolive at 45.0x FY27E EPS, implying a target price of INR 2,742. We upgrade our rating from “REDUCE” to “ACCUMULATE” on the stock.
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