Shares of Colgate Palmolive India rose by 6% in trade on July 27, following the announcement of the company’s Q1 results which surpassed market predictions. At 14:10 pm, the company’s stock was trading 6.72% higher at Rs 2,010 on BSE.
The personal care giant reported a robust growth of 10.6% year-on-year in revenue from operations, amounting to Rs 1,323.67 crore for the quarter ended June FY23.
The figures indicate a strong performance in domestic sales growth at 12.3% and a double-digit rise in toothpaste sales. The company also saw its profit surge by 30.5% to Rs 273.7 crore compared to the same period last year, reflecting a solid operating performance.
However, despite the impressive results, brokerage firms Emkay Global and Centrum Broking have both assigned a ‘sell‘ rating to the Colgate Palmolive stock, with target prices of Rs 1720 and Rs 1655 respectively. They cited reasons such as expensive valuations and limited business diversification for their bearish view.
On the contrary, Diwakar Rana, Senior Research Analyst at Prudent Equity, lauded the company’s significant sales and profit growth of 10.7% and 30.5% respectively. The company’s newly appointed CEO, Prabha Narasimhan, aims to drive volume growth and expand the oral care category.
The stock’s performance has been substantial over the last six months, yielding a return of 37.81%, outshining the benchmark Nifty50 index which returned 12.10% over the same period.
CPIL reported strong Q1FY24 earnings, reflecting 11% YoY revenue growth, primarily driven by a volume increase of around 6-7%. Gross margins also improved both quarter-on-quarter and year-on-year as the company successfully raised prices amidst softened raw material costs.
The company, which leads the market in oral care, has witnessed high double-digit growth in its toothpaste category for the June 2023 quarter. Despite facing strong competition from established players like Dabur and Hindustan Unilever, CPIL has managed to start regaining market share in the last two quarters.
While the company’s performance looks promising, market analysts recommend observing the earnings trend over the next few quarters before making a decisive investment call.
At the time of writing, Colgate is trading at Rs. 2,013.45, with a marketcap of ₹ 54,675 Crore. The current P/E is 48.6.
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