After a dull spell for Colgate-Palmolive (India), leading domestic brokerage firm Motilal Oswal is predicting a potential turnaround for the stock. The brokerage house has upgraded the stock to a ‘Buy’ rating and set a target price of Rs 2,850. This implies an upside potential of around 25% from the current market levels.
According to Motilal Oswal, while Colgate’s recent quarterly performance was muted, the company is well-positioned for a recovery driven by tax relief, improving demand trends, and a push toward premium products.
Let’s take a look at the three reason why the brokerage is bullish on the stock-
Motilal Oswal on Colgate: Weak Q2, but margins show resilience
Colgate’s September quarter (Q2FY26) results reflected continued sluggishness. Revenue declined 6% year-on-year to Rs 1,520 crore, in line with estimates, largely due to trade disruptions and a high base effect. Volumes were estimated to have fallen about 5%.
Despite this, margins held firm. As per the brokerage report, “Gross margin expanded 100bp YoY and 60bp QoQ to 69.5% (est. 67.9%). EBITDA margin was flat YoY at 30.6% (est. 29.8%). EBITDA declined by 6% YoY to Rs 470 crore.”
Motilal Oswal noted that Colgate continued to focus on premiumisation, investing heavily in its brands, which helped its premium portfolio outperform the mass segment.
Motilal Oswal on Colgate: GST relief to boost recovery momentum
The game-changer, according to analysts, is the GST rate cut on oral care products, which has reduced tax from 18% to 5%, benefiting nearly 95% of Colgate’s portfolio.
The brokerage said, “Following the reduction in the GST rate on the entire oral care portfolio from 18% to 5%, we believe CLGT is well positioned for a recovery in the coming quarters, supported by improving demand trends.”
Motilal Oswal on Colgate: Focus shifts to innovation and rural growth
Motilal Oswal’s note highlighted that Colgate is shifting gears toward sustainable revenue growth, backed by new product launches, marketing efforts, and deeper rural reach.
As per the report, the company remains focused on “launching science-backed, premium innovations to enhance realisations,” and “expanding category reach through increased marketing and consumer education.”
It also aims to “deepen rural penetration to drive frequency and new user addition,” while broadening its presence beyond oral care to reduce dependence on a slower-growing category.
Motilal Oswal on Colgate: Attractive valuations after sharp correction
Colgate’s stock has underperformed over the past year, falling nearly 30%, which has made its valuation more reasonable, according to Motilal Oswal.
The brokerage said, “The stock is trading at a comfortable valuation of 40x P/E for FY27. Maintain ‘Buy’ with a target price of Rs 2,850 (45x Sep’27).”