Reduce Colgate Palmolive India; target of Rs 2721: KR Choksey

Reduce

KR Choksey's research report on Colgate Palmolive India

For Q3FY25, the revenue increased to 4.7% YoY (-9.7% QoQ) to INR 14,618 Mn, which missed our estimate by 3.9%. The company YoY growth, driven by toothpaste sales which showed mid-single digit volume growth. EBITDA decreased by 3.0% YoY (-8.6% QoQ) to INR 4,544 Mn, missing our estimate, mainly due to higher than estimated cost of goods sold. EBITDA margin decreased by 248bps YoY (+36bps QoQ) to 31.1%, underperforming our estimate by -231 bps. Net profit decreased by 2.2% YoY (-18.3% QoQ) to INR 3,228 Mn, which missed our estimate. We lower our FY26E/FY27E Adj. EPS estimates by 6.5%/7.0%, factoring in weaker-than-expected Q3FY25 results, a challenging operating environment, and intensified competition. We expect Revenue/EBITDA/Adj. PAT to grow by 9.6%/ 7.8%/ 8.3% CAGR over FY24-27E.

Outlook

Colgate India’s share price is currently trading at 54.9x/49.2x its FY26E/FY27E EPS. We roll over our valuation to FY27E, assigning a P/E multiple of 43x on FY27E EPS of INR 62.7 (previously INR 67.4), resulting in a target price of INR 2,721 (previously INR 3,067). Subsequently, maintain our “REDUCE” rating on Colgate-Palmolive Ltd shares.

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Colgate Palmolive India - 30012025 - kr