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Revenue dips 2% YoY; miss on all fronts

* Colgate’s sales declined 2% YoY to INR14.6b (est. INR15.5b) in 4QFY25. Sales were hit by the soft urban demand and intensified competition.

* Revenue declined after 31 quarters (except for the Covid period). The last four quarters clocked a 10% YoY average growth.

* We believe that the toothpaste volume declined in the low single digits (est. 3%).

* Gross margin expanded 130bp YoY to 70.6% (est. 69.9%). Gross profit was flat YoY.

* Ad spending, employee expenses, and other expenses rose 7% each and adversely impacted the EBITDA performance.

* EBITDA dipped 6% YoY to INR5.0b (est. INR5.4).

* EBITDA margin contracted ~170bp YoY to 34.1% (est. 34.7%).

* PBT declined 7% YoY to INR4.8b (est. INR5.2b).

* APAT dipped 7% YoY to INR3.6b (est. INR3.9b).

* In FY25, net sales/EBITDA/APAT grew 6%/3%/4%.

Other key highlights

* The company relaunched the Colgate Strong Teeth toothpaste.

* It also introduced the Colgate Total Plaque Release toothpaste during the quarter.

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