Motilal Oswal's research report on Colgate
CLGT's strategic pillars that drive volume and value growth in oral care are intact. The company continues to expand its personal care portfolio and sees significant potential in preimmunizing the toothpaste and toothbrush categories. Rapid advancements in digital initiatives have enhanced CLGT's distribution, improving the product assortment in its directly serviced outlets (1.7m outlets). Management highlighted that in urban areas, toothpaste volume growth has continued to decelerate (since Mar’24), while growth was stable for toothbrush. Rural growth has been picking up well for both categories, in line with the trends observed across the FMCG sector. Notably, 2QFY25 marked the first quarter when urban toothpaste volume growth trailed rural growth, and urban toothbrush volumes were on par with rural. While urban markets face persistent challenges, rural areas are showing growth momentum.
Outlook
We expect CLGT to deliver a CAGR of 9%/10%/11% in sales/EBITDA/adj. PAT over FY24-27E. We reiterate our Neutral rating on the stock with a TP of INR 3,250.
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