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Dolat Capital Report
Colgate-Palmolive India Ltd.'s Q1 FY25 revenue was ahead of our estimates. Domestic business revenue grew 13.1% YoY, led by high single-digit volume growth in toothpaste portfolio. Growth was supported by gradual demand recovery in rural markets.
Gross margin expanded 220 basis points YoY due to deflation in key raw material prices. Additionally, cost-saving initiatives led to Ebitda margin expansion of 240 bps despite higher investment in advertising.
As Q1 volume growth was a beat, we increase our FY25/26E earnings per share estimates by 2.2/4.4% at Rs 56.0/62.2. We upgrade our rating to ‘Reduce' from Sell and value the stock at 52 times FY26E EPS (10% disc to HUL) to arrive at target price of Rs 3,232, led by improvement in company's overall performance.
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