Buy Colgate; target of Rs 1018:ICICIDirect

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26 Aug, 2025 12:21

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ICICIDirect's research report on ColgateColgate-Palmolive (CPIL) reported its Q3FY16 results that were in line with our estimates on the operational & earnings front. However, net sales grew 1.8% YoY to | 1006.4 crore, lower than our expectation of | 1035.8 crore. Volume growth for CPIL was at 1% Operating margins witnessed an improvement of 326 bps to 22.8% (I-direct estimate: 22.6%). Soft raw material cost (down 118 bps as percentage of sales) & judicious A&P spend (down 227 bps as percentage of sales) drove the expansion in margins for CPIL On the back of higher EBITDA, earnings grew 21.8% YoY to | 159.4 crore (I-direct estimate: | 156.5 crore)Led by CPIL’s constant effort to innovate its portfolio and drive premiumisation in oral care, we expect margins to witness an improvement to 22.8% by FY18E aiding profitability growth of 12% CAGR (FY15-18E). Considering earnings visibility, sturdy return ratios, robust margins, we value CPIL at 35x its FY18E EPS to arrive at a target price of | 1018 per share and assign a BUY recommendation to the stock.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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