Buy Colgate; target of Rs 2850: Motilal Oswal

Motilal Oswal is bullish on Colgate recommended buy rating on the stock with a target price of Rs 2850 in its research report dated October 23, 2025.

Broker Research

October 24, 2025 / 12:39 IST

buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Colgate

Colgate’s (CLGT) 2QFY26 performance remained weak as its revenue fell 6% YoY to INR15.2b (in line) on a high base of 10% growth and due to the impact of GST-led transition (trade disruptions). We believe that volume is likely to have declined ~5% (in line). CLGT continued to focus on premiumization and investing in its brands, resulting in the premium portfolio delivering better revenue growth. Gross margin expanded 100bp YoY and 60bp QoQ to 69.5% (est. 67.9%). EBITDA margin was flat YoY at 30.6% (est. 29.8%). EBITDA declined by 6% YoY to INR4.7b. CLGT’s performance has been relatively weak over the past 4-5 quarters, marked by muted revenue growth and margin contraction. However, following the reduction in the GST rate on the entire oral care portfolio from 18% to 5%, which benefitted nearly 95% of the company’s portfolio, we believe CLGT is well positioned for a recovery in the coming quarters, supported by improving demand trends.

Outlook

We recently upgraded CLGT from Neutral to BUY following the rollout of GST 2.0 (link) and ~30% stock correction over the past 12 months. The stock is trading at a comfortable valuation of 40x P/E for FY27. Maintain BUY with a TP of INR2,850 (45x Sep’27).

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