Colgate Q2 Review — GST Revision Hit Performance Says Dolat Capital Maintaining 'Reduce', Trims Target Price

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Dolat Capital Report

Colgate-Palmolive Ltd.’s Q2 FY26 results came below our estimates.

Domestic business revenue declined 6.2% YoY, with our analysis indicating a mid-single-digit volume drop on an unfavorable base of high singledigit growth.

The weak performance was further impacted by a tough operating environment and temporary disruption caused by GST rate revision.

Though the company expects a gradual recovery in H2 FY26.

Gross margin expanded by 90bps YoY to 69.5% led by lower raw material cost. However, higher employee and other expenses resulted in Ebitda margin contraction of 10bps to 30.6%.

We have downward revised our FY26/27E EPS estimates by 4.5/3.6% at Rs 51.8/56.4 to factor in Q2 performance and increased competitive intensity. We have also introduced FY28E EPS at Rs 60.9. Valuing the stock at 40x FY27E EPS, we have arrived at a target price of Rs 2,435 (Rs 2,604 earlier). Maintain ‘Reduce’ rating.

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