Colgate-Palmolive Q1 Results Review - Volume Beat, Disclosure, A Welcome Surprise: Yes Securities

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Yes Securities Report

Colgate-Palmolive India Ltd. delivered robust Q1 FY25 performance. Domestic revenue growth stood at a two year compound annual growth rate of 12.6% on the back of high singledigit volume growth in Toothpaste segment (higher than our estimate of 3%).

Gross margin profile continues to improve, which led to higher operating margins versus our estimate. Pickup in rural market (outpaced urban markets for second consecutive quarter), relaunch/restaging of key brands done in H2 FY24, activations through campaigns, along with premiumization should continue to support near-term growth.

We have been surprised by the company on margins over the last few quarters. Assuming current margin profile stays and sees further modest improvement in FY25 and FY26, we see a 5.1%/7.4% upwards revision in our FY25E/FY26E EPS.

Disclosure of volume growth improvement will be welcomed by the street, but we hope it remains part of disclosure in future as well. We roll-forward our valuation to Sep'26E EPS and assign a higher target multiple of ~48 times now, which changes our target price to Rs 3,300 (Rs 2,700 earlier). Maintain Neutral. Market share movement and update on diversification being explored in personal care will aid further rerating.

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