Reduce Colgate Palmolive India; target of Rs 3067: KR Choksey

KR Choksey's research report on Colgate Palmolive India

For Q2FY25, the revenue increased 10.1% YoY (+8.2% QoQ) to INR 16,191 Mn, which is in line with our estimates of 0.8%. The YoY growth was led by high single-digit volume. EBITDA increased 3.2% YoY (-2.2% QoQ) to INR 4,974 Mn, missing our estimate, mainly due to higher than estimated operating expenses. EBITDA margin decreased by 206 bps YoY (-325 bps QoQ) to 30.7%. Net profit increased 16.2% YoY (+8.5% QoQ) to INR 3,951 Mn which is largely in line with our estimate. The Board declared a first interim Dividend of INR.24/ share for the FY24-25E. We lower our FY25E/FY26E Adj. EPS estimate by 3.0%/6.0%, respectively, due to subdued demand, elevated ad spending, and a challenging environment.

Outlook

We maintain a P/E multiple of 51.0x, resulting in a target price of INR 3,067 per share (previously: INR 3,265). We maintain our “REDUCE” rating for Colgate-Palmolive Ltd shares.