Colgate Palmolive share price jumps over 6% to 52-week high as brokerages raise target after strong Q1 results

Colgate Palmolive share price jumped over 6% to 52-week high on Tuesday after the company reported strong earnings for the first quarter of FY25. Colgate shares rallied as much as 6.20% to ₹3,408.40 apiece on the BSE.

Colgate Palmolive India posted a consolidated net profit of ₹364 crore in Q1FY25, registering a growth of 33% from ₹273.68 crore in the year-ago quarter. The company’s revenue in the June 2024 quarter increased 13% to ₹1,485.8 crore from ₹1,314.7 crore, year-on-year (YoY).

The company saw continued demand pickup in rural markets outpacing growth in urban markets for the second quarter in a row during the quarter.

Colgate-Palmolive’s Managing Director & CEO Prabha Narasimhan said that the company’s toothpaste portfolio witnessed double-digit growth driven by high-single digit volume growth.

Operational performance also improved as EBITDA in Q1FY25 rose 21.5% YoY to ₹508.3 crore, while EBITDA margin expanded by 240 basis points (bps) to 34%.

Analysts have raised their target prices on Colgate Palmolive shares after the strong Q1 results but believe the current stock valuations have priced in most near term triggers and offer limited upside.

Here’s what brokerages said on Colgate Palmolive Q1 results and Colgate Palmolive shares:

Emkay Global

Colgate India has turned around its fortune under the new leadership, where actions in the core oral care portfolio have been rewarding. Regarding the two key concerns of low-volume growth and business diversification, the company has addressed the first concern with high single-digit toothpaste volume growth in Q1FY25. The improved show led us to upgrade earnings by 2-3% over FY25-27E and target valuations multiple to 45x from 41x, said Nitin Gupta, Senior Research Analyst at Emkay Global Financial Services Ltd.

In the absence of much action on diversification, Emkay Global now sees high single-digit sales growth over FY25-27E. The brokerage firm lifts the margin for FY25E by 100 bps but sees moderate improvement over FY26-27E, thereby limiting support to earnings.

Given the limited earnings visibility, Emkay Global maintained ‘Reduce’ rating on Colgate Palmolive shares and raised June 2025 target price to ₹2,850 per share from ₹2,525 earlier.

Motilal Oswal

Motilal Oswal Financial Services raised its EPS estimates for FY25 and FY26 by 6-7% on the back of improving volume performance, aggressive pricing strategy, and consistent operating margin expansion. It believes FY25 will be a testing period for Colgate Palmolive in terms of margin trajectory and volume expansion. It seems both gross margin and EBITDA margin have reached peak levels.

The dilemma about prioritizing growth vs. maintaining margins will persist, and to accelerate growth, margins may contract. The current valuations at 56x/52x P/E on FY25E/ FY26E capture most of the near-term triggers, Motilal Oswal said.

The brokerage firm reiterated its ‘Neutral’ rating on the stock and raised the target price of ₹3,150 per share.

Kotak Institutional Equities

Kotak Institutional Equities raised revenue forecasts by 2-5%, while tweaking margin estimates, leading to ~3-5% upgrade in its FY 2025-27 EPS estimates. Its estimates imply ~9.5% revenue CAGR and ~105 bps EBITDA margin expansion over FY 2025-27.

The brokerage firm retained ‘Reduce’ rating as it believes Colgate stock is more than fully priced and raised target price to ₹2,875 per share from ₹2,525 earlier.

At 9:30 am, Colgate Palmolive shares were trading 6.08% higher at ₹3,404.40 apiece on the BSE.

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