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Steady revenue growth as compared to last year: Colgate Palmolive India reported steady Q3FY24 revenue growth of 8.1% to Rs 1,395.7cr, driven by domestic growth at 8.8% YoY. On a sequential basis, revenue de-grew by 5.1%. Overall topline growth was led by improved traction in the oral care category specially toothpaste with double-digit growth and positive volume expansion

Healthy margin improvement: Colgate’s gross profit for Q3FY24 grew by 18.4% YoY but was flat sequentially to Rs 1,007.3cr and gross margins improved by 631bps YoY and 341bps QoQ to 72.7% led by decline in raw material cost by 11.9% YoY and 15.5% QoQ. Despite an increase in advertisement cost by 20.2% YoY and employee cost by 11.0% YoY, EBITDA witnessed a growth of 29.6% YoY to Rs 468.4cr while was marginally down by 2.8% QoQ. EBITDA margin improved to 33.6% to 557bps YoY and 79bps QoQ. PAT grew by 35.7% YoY but was down by 2.9% QoQ to Rs 330.1cr with PAT margin at 23.7%, higher by 482bps YoY and 54bps QoQ

Robust 9MFY24 performance: The Company reported 9MFY24 revenue of Rs 4,190.4cr, up by 8.1% as compared to 9MFY23. Further, its gross profit grew by 15.7% YoY to Rs 2,924.8cr with margin at 69.8%, improved by 454bps YoY led by decline in raw material cost by 6% YoY. Its EBITDA grew by 25% YoY to Rs 1,368.6cr with margin at 32.7% and improvement of 440bps YoY. Its PAT for 9MFY24 was up by 29.1% YoY to Rs 943.8cr and margin at 22.5% with an improvement of 366bps YoY.

Key highlights: 1) Management remains positive on the growth prospect of the company and the plan is to continue investment behind its brands, focus on technology, cost management and focus on right talent. 2) This quarter their campaign, 'The Sweet Truth - Brush at Night’ reached over 300mn people in urban India. 3) Amongst the products, Colgate MaxFresh underwent a relaunch and they introduced a new-to-world proprietary formula infused with unique cooling crystals to deliver a superior freshness experience to consumers. 4) The new campaign for Colgate MaxFresh was NeendBhagaoTaazgiJagao.

Outlook & Valuation: Colgate continued to deliver yet another quarter of steady numbers. Despite competition their focus is to drive growth by launching and relaunching oral care products largely in the toothpaste category, expanding distribution reach, increasing advertising spend and focus on campaigns to promote brand recall value. On the financial front, we expect its revenue/EBITDA/PAT to grow at 8%/13.4%/15% CAGR over FY23-26E and continue to maintain our Accumulate rating with a revised target price upwards to Rs 2,813.

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