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HDFC Securities Institutional Equities
The brokerage firm HDFC Securities has maintained its Reduce rating with a Jun‑27 target price of Rs 2,000, based on a 35x P/E, ~20% discount to the its last five‑year average forward P/E.
The brokerage's cautious view is underpinned by Colgate's concentrated execution in oral care, a category marked by intense competitive pressure and modest underlying growth.
While management's focus on premiumisation and driving consumption has delivered some success, it has not meaningfully improved overall performance.
Looking ahead, with core brands supporting volume growth, premium products aiding mix growth, and price increases (helping offset inflation), management expects topline growth to remain balanced and sustain at double‑digit levels.
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The company aims to maintain its gross margin; however, the pursuit of growth will necessitate higher advertisement and promotions investments, which could weigh on earnings delivery.
Management indicated that actions on incubating new categories under parent brands will be undertaken at the appropriate time
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