Accumulate Colgate Palmolive; target of Rs 1639: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Colgate Palmolive

CLGT reported tepid numbers with ~3% decline in volumes and input cost pressures and sustained competitive activity in core category of oral care. 14.6% decline in absolute ad-spends have enabled CLGT to curtail margin compression and post 3.3% PAT growth. Core brands like Colgate Strong Teeth, Max fresh and Active salt continue to drive growth for the company. CLGT is focusing on accelerating growth led by 1) Ramping up innovations (Max Fresh Charcoal, Palmolive facewash and Electric Toothbrushes 2) Increasing promotion intensity 3) sustained investments to increase presence in personal care segment (foams, scrubs and masques under Palmolive brand).

Outlook

We estimate 8.1% Sales and 10.3% PAT CAGR over FY23-25 assuming 4.3% decline in FY23 EPS. Revival in rural demand and success in personal care hold key to improving valuations. Although CLGT’s growth is unexciting, favorable financial parameters (36x Sep’24 EPS, 2.2% Dividend yield, 90%+ payout and ~80% ROCE) limit downside. We value CLGT at 37x Sep’24 EPS and assign a Target of Rs 1639 (earlier Rs 1701 on 37xFY24 EPS). Retain Accumulate.

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Colgate Palmolive - 211022 - prabhu