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Miss on All Fronts; Long-term Strategy Intact

Est. vs. Actual for Q1FY26: Revenue – MISS; EBITDA – MISS; PAT – MISS

Changes in Estimates post Q1FY26

FY26E/FY27E: Revenue: -2%/-4%; EBITDA: -2%/-7%; PAT: -1%/-6%

Recommendation Rationale

• Subdued Performance: Colgate-Palmolive reported Q1FY26 revenue of Rs 1,421 Cr, down 4.4% YoY, affected by muted urban demand, heightened competition, and an unfavourable base effect. Despite topline pressure, management highlighted continued progress in category premiumization, with a strong focus on innovation. The premium portfolio delivered robust growth during the quarter, partially offsetting broader volume weakness.

• Demand Outlook: Near-term macro headwinds remain; however, management expects a gradual recovery to begin in H2FY26.

Sector Outlook: Cautiously positive Company

Outlook & Guidance: We have cut our FY26/FY27 estimates, each to account for the weak near-term demand environment.

Current Valuation: 43x Mar’27 EPS (Earlier Valuation: Same).

Current TP: Rs 2,660/share (Earlier TP: Rs 2,830/share ).

Recommendation: With an upside of 12% from the CMP, we maintain our BUY rating on the stock.

Financial Performance: The company’s revenue decreased by 4.4% YoY, led by subdued urban demand environment and tightened competition. Gross margin declined by 180 bps YoY to 68.6%. Meanwhile, EBITDA decreased by 11% YoY, with EBITDA margins down by 236 bps to 31.9% due to higher staff costs. The adjusted PAT stood at Rs 321 Cr, a decline of ~12% YoY.

Outlook & Recommendation We appreciate the company’s overall long-term strategy, which focuses on driving top-line growth through initiatives such as: 1) Launching science-based premium products to enhance overall realisations, 2) Developing the category by increasing awareness through marketing initiatives, 3) Increasing the frequency of consumption and penetration in rural markets, and 4) Expanding the personal care portfolio to mitigate risks associated with the slow-growing oral care category. Moreover, demand environment is likely to improve in the coming quarters (H2FY26), and the stock price correction of 40% from the latest high provides a huge margin of safety. Hence, we maintain our BUY rating with a revised TP of Rs 2,660/share, implying an upside potential of 12% from the CMP

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SEBI Registration number is INZ000161633