Hold Colgate Palmolive; target of Rs 2654: Prabhudas Lilladher

Prabhudas Lilladher's research report on Colgate Palmolive

CLGT delivered 1.8% revenue de-growth in 4Q25 led by flat volume growth along with negative realization with urban demand under pressure and increased promotional spending led by heightened competitive intensity. Near term outlook is cautious given that 1) urban demand continues to remain muted at mass end 2) heightened competitive landscape 3) rising promotional intensity in oral care and 4) lower realization growth (~1.2% in FY25). We expect moderate growth as a phase of high realization and margin growth is behind (GM and EM expansion of 470/680bps over FY20-25). Although CLGT’s long term drivers are intact led by 1) driving core toothpaste brands 2) premiumization through science-backed innovations (MaxFresh sensorial, Total Plaque and Visible White Purple) 3) expanding the personal care portfolio, but any major acceleration in growth looks unlikely.

Outlook

We expect volume growth to settle at mid-single digits with mid to high single sales growth. We estimate 6.75% EPS CAGR over FY25-27. We value CLGT at 45x FY27 EPS and assign a target of Rs2654 (Rs2650 earlier). Retain Hold.