Hold Colgate-Palmolive (India); target of Rs 2548: KR Choksey

KR Choksey recommended hold rating on Colgate-Palmolive (India) with a target price of Rs 2548 in its research report dated January 23, 2024.

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January 24, 2024 / 18:07 IST

hold

26 Aug, 2025 12:21

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KR Choksey's research report on Colgate-Palmolive (India)

For Q3FY24, CLGT reported revenue of INR 13,957 Mn, a growth of 8.1% YoY but a decline of 5.1% QoQ. The revenue was 2.1% higher than our estimate, driven by strong growth in core brands. The toothpaste segment achieved double-digit growth and positive volume growth. For 9MFY24, revenue grew by 8.1% YoY to INR 41,904 Mn. • Gross margin for the quarter saw a strong improvement of 631 bps YoY/ 341 bps QoQ to 72.2%. The gross margin improvement was led by soft RM costs and premiumization. The gross margin for 9MFY24 improved by 454 bps YoY to 69.8%. • EBITDA for the quarter improved by 29.6% YoY to INR 4,684 Mn, while it was lower by 2.8% QoQ. EBITDA was higher than estimated by 7.3% due to strong gross margin performance. EBITDA margin expanded by 557 bps YoY/ 79 bps QoQ to 33.6%. • For 9MFY24, EBITDA grew by 25.0% YoY to INR 13,686 Mn while EBITDA margin expanded by 440 bps YoY to 32.7%. • PAT for the quarter was at INR 3,301 Mn, a growth of 35.7% YoY but a decline of 2.9% QoQ. PAT was higher than estimated by 11.8% due to stronger operating performance, lower depreciation expense and higher-than-expected other income. For 9MFY24, PAT grew by 29.1% YoY to INR 9,438 Mn. Adj. PAT for the YTD period grew by 30.1% YoY to INR 9,633 Mn.

Outlook

CLGT’s shares are trading at a 1-year fwd P/E multiple of 48.9x, which is at higher levels vs. a 5-year average of 38.1x. We roll over our valuation to FY26E and assign a P/E multiple of 45.0x (from 42.0x on FY25E Adj. EPS earlier) on FY26E Adj. EPS of INR 56.6 and arrive at a target price of INR 2,548 per share (INR 2,124 earlier), implying a potential upside of 4.5% from CMP. Accordingly, we maintain a “Hold” rating on the shares of Colgate Palmolive India.

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