Colgate Palmolive‘s share price surged over 6% to reach a 52-week high on Tuesday following the company’s strong earnings report for the first quarter of FY25. Colgate shares climbed as much as 6.20% to Rs 3,408.40 apiece on the BSE.
Brokerages on Colgate Palmolive
Nomura on Colgate
According to a Nomura report on Colgate, the firm has issued a sell call with a target price of Rs 2,800. The report highlights that Q1 was an all-round beat, with volume growth of 6-7% versus the estimated 2%.
Additionally, strong gross profit margin (GPM) and operating profit margin (OPM) expansion continue to drive 22% EBITDA growth. Nomura has increased its EPS estimates for FY25/26/27 by 4.0%/2.8%/1.6% to account for the Q1 performance.
However, the report suggests that the risk-reward is unfavorable as Colgate is entering a moderate EPS growth phase.
Jefferies on Colgate
Jefferies report on Colgate has issued a buy call, raising the target price to Rs 3,570. The report highlights that the company delivered impressive revenue growth, driven by a confluence of macro factors.
Colgate experienced a pickup in rural areas along with strong execution. Higher-than-expected gross margins, combined with operating leverage benefits, helped the company report earnings well ahead of estimates.
This Q1 result beat has driven Jefferies to upgrade its earnings estimates for the third quarter in a row.
HSBC on Colgate
HSBC report on Colgate has issued a hold rating with a target price of Rs 3,000. The report attributes the stock’s impressive run-up to revenue growth, margin reset, and the rise of market defensiveness.
Colgate’s Q1 results stand out by a wide margin, featuring high-single-digit volume growth and a significant beat on revenue and profits. However, the report notes that valuations are rich and sees limited upside potential.
BoFA on Colgate
Bank of America (BoFA) report on Colgate has issued an underperform (U-P) rating with a target price of Rs 3,175. The report notes that Q1 results were ahead of expectations, but cautions that the margin trajectory could normalize.
BoFA believes that medium-term upside potential is already priced in. The report also highlights that while Q1 performance was strong last year, growth rates normalized thereafter.
CLSA on Colgate
CLSA report on Colgate has upgraded the stock to a hold rating and raised the target price to Rs 3,157. The report indicates that Q1 sales were 3% above estimates, and EBITDA exceeded estimates by 2%.
Toothpaste volume growth in Q1, which was in the high single digits, surpassed the estimated growth of around 6%. Additionally, rural sales grew faster than urban sales for the second consecutive quarter.
Motilal Oswal on Colgate
Motilal Oswal’s report on Colgate maintains a Neutral rating with a target price of Rs 3,150, based on a valuation of 50x the June 2026 EPS, up from the previous 45x P/E. The current valuations at 56x and 52x P/E for FY25E and FY26E, respectively, are said to capture most near-term triggers.
The report raises EPS estimates for FY25 and FY26 by 6-7% due to improving volume performance, an aggressive pricing strategy, and consistent operating margin expansion. However, Colgate’s sales growth has lagged behind staples peers from a 5- and 10-year CAGR perspective, with overall growth appearing stagnant.
The company has struggled to outperform due to high oral care penetration (99%) and competition from herbal players. Additionally, premiumization in general trade and traction in the personal care portfolio have been slow.
The report anticipates that FY25 will be a challenging period for Colgate, particularly regarding margin trajectory and volume expansion. Both gross margin and EBITDA margin seem to have reached peak levels, and the company will face a dilemma between prioritizing growth and maintaining margins, with potential margin contraction to accelerate growth.
Colgate Palmolive Stocks Performance in Last One Year
In terms of stock performance, Colgate Palmolive shares have demonstrated positive returns across multiple time frames. Over the past month, the stock has given a commendable 18.57% return, showcasing its stability and growth potential. The last six months have seen even more impressive results, with a substantial increase of 36.24%, indicating a strong upward trend.
Year-to-date, Colgate Palmolive shares have surged by 37%, reinforcing the stock’s positive momentum in the current fiscal year. Looking at the broader picture, the stock has delivered an impressive return of over 68.31% in the last twelve months, emphasizing its sustained growth and attractiveness to investors.
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