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Double-digit revenue growth; a positive start to FY27

* Colgate (CLGT) delivered 12% YoY revenue growth to INR16.0b (est. INR15.6b, 2-yr CAGR 3.5%) in 1QFY27. The company registered double-digit revenue growth after six quarters with a healthy high-single-digit volume growth (est. 4.5%). Growth was broad-based across its core and premium portfolio and was balanced between pricing and volume.

* Dabur’s oral care delivered high-single-digit growth, while HUVR’s oral care delivered mid-single-digit revenue growth in 1QFY27.

* Gross margin expanded 100bp YoY to 70% (est. 69%), with the gains reinvested into brand building and premiumization initiatives. Consequently, ad spending increased 34% YoY, resulting in a 140bp YoY contraction in EBITDA margin to 30.1% (est. 32.1%; FY26: 31%).

* Management remains focused on driving balanced growth through volume recovery and selective pricing actions while continuing to invest in brands and premiumization to sustain top-line growth. We reiterate our BUY rating on the stock with a TP of INR2,500 (based on 40x Mar’27E EPS).

Key highlights from the management commentary

* The toothpaste portfolio posted robust high-single-digit volume growth, driven by stellar performance in premium toothpaste and sustained growth in the core portfolio.

* Brand investments were accelerated to further strengthen the premiumization strategy in the Oral Care category.

* The company expanded its premium oral care portfolio with the launch of Colgate MaxFresh Berry Blast and the Colgate Total Active Prevention Foaming Clean Toothbrush, while also rolling out a summer campaign for MaxFresh Peppermint Ice to strengthen the freshness proposition.

Valuation and view

* There are no material changes in our EPS estimates for FY27 and FY28.

* Heading into FY27, management reiterated its focus on driving balanced growth through volume recovery and selective pricing actions while continuing to invest behind brands and premiumization initiatives to support top-line growth. We model 9% revenue CAGR and 11% EBITDA CAGR over FY26-28E. We reiterate our BUY rating on the stock with a TP of INR2,500 (based on 40x Mar’27E EPS).

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