Buy Colgate-Palmolive; target of Rs 1050:Emkay

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26 Aug, 2025 12:21

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Emkay research report on Colgate-PalmoliveRevenue miss, but strong margin beat - Revenues Rs 10.3bn, +3.8% yoy; volumes at ~3% yoy due to fiscal phase out; EBITDA Rs 2.5bn, up 38% yoy & APAT Rs 1.6bn, up 21% yoy Volume tad below estimates weighed by fiscal phase out, but organic growth healthy at 10% and share gains continues; toothpaste rises 90bps yoy. Gross margin strong at 63.9%, up 140bps; lower employee cost and rational ad spends aided stellar margin performance of 600bps to 24%. Margin tailwinds are strong given likely uptick in urban volumes, strong wave of premiumisation and controlled ad spends. Cut in revenue by 4%/6% led to 3% earnings cut in FY17E. Company is focused on growing through innovations and share gains. Channelised ad & promotion spend and premiumisation will aid margins. Retain BUY with revised price target of Rs1,050/share Margin performance more than offset muted volume growth in the quarter. Volumes may be muted for another couple of quarters due to fiscal phase out, but growth are strong for uptick in FY17. Cut in revenue by 4%/6% led to 3% earnings cut in FY17E. However, company remains focused on growing through innovations and market share gains. Channelised ad & promotion spend strategy along with premiumisation & lower inputs will drive margins. We retain BUY with revised price target of Rs 1,050/share.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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