Neutral on Colgate-Palmolive (India), target price Rs 3,250: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a neutral call on Colgate-Palmolive (India) with a target price of Rs 3250. The current market price of Colgate-Palmolive (India) is Rs 2924.25. Colgate-Palmolive (India) Ltd, incorporated in 1937, is a Large Cap company with a market cap of Rs 79470.12 crore, operating in FMCG sector.

Colgate-Palmolive (India) Ltd. key Products/Revenue Segments include Personal Care, Service Income and Scrap for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Standalone Total Income of Rs 1695.09 crore, up 11.51% from last quarter Total Income of Rs 1520.11 crore and up 13.60% from last year same quarter Total Income of Rs 1492.10 crore. The company has reported net profit after tax of Rs 395.05 crore in the latest quarter.

Investment Rationale
In 1HFY25, Colgate has achieved volume expansion while maintaining its margin trajectory. However, historically, CLGT's volume growth has lagged behind that of its peers. Hence, tracking its volume performance in the upcoming quarters is important, especially given the current softness in urban demand. Both gross and EBITDA margins have reached their peak levels, and it will be crucial to monitor the sustainability of these margins going forward. Motilal Oswal Financial Services models ~34% EBITDA margin for FY25 and FY26. They expect Colgate to clock a CAGR of 9%/10%/11% in sales/EBITDA/adj PAT over FY24-27. The brokerage reiterates a Neutral rating on the stock with a target price of Rs 3,250 (based on 50x Sep-26E EPS).

Promoter/FII Holdings
Promoters held 51 per cent stake in the company as of 30-Sep-2024, while FIIs owned 24.94 per cent, DIIs 5.54 per cent.