Synopsis: Colgate Palmolive, after reporting a 17 percent YoY drop in profitability, bagged mixed reactions from different brokerage firms, some citing a drop in volume growth worse than expected, whereas others said that GST-led destocking was the main concern.
The shares of this leading manufacturer of toothpaste, tooth powder, toothbrush, mouthwash, and personal care products are in focus after reporting a weak Q2 performance, bagging mixed reactions from different brokerages. In this article, we will dive more into the details.
With a market capitalization of Rs 60,169 crore, the shares of Colgate-Palmolive (India) Ltd made a day’s low of Rs 2200.60 per share, down 4 percent from its previous day’s closing price of Rs 2288.80 per share. Over the past five years, the stock has delivered a poor return of 51 percent, underperforming NIFTY 50’s return of 117 percent.
Q2 Highlights
Colgate has reported a total revenue from operations of Rs 1,520 crore in Q2 FY26, a decline of 6 percent as compared to Rs 1,619 crore in Q2 FY25. However, on a quarter-on-quarter basis, it grew by 6 percent from Rs 1,434 crore.
Regarding its profitability, it reported a net profit of Rs 328 crore in Q2 FY26, a decline of 17 percent as compared to Rs 395 crore in Q2 FY25. However, on a quarter-on-quarter basis, it grew by a minor 2 percent from Rs 321 crore.
Additionally, the company has declared its first interim dividend of Rs 24 per equity share of face value of Rs 1 for FY25-26 and has set November 3, 2025, as the record date.
Analyst Comments
Jefferies: Jefferies was the only one bullish and therefore decided to keep its buy rating with a target price of Rs 2,700, signifying an upside of 18 percent from its previous closing price. It explained the weak Q2 performance as a result of temporary GST-related destocking and a high base, adding that Colgate’s premium product portfolio is still gaining strong traction
Citi: Citi retained its sell call, slashing the target to Rs 2,100, signifying a downside of 8 percent from its previous closing price and pointing out the fierce competition and the short-term effect of the GST-led destocking. However, the company expects things to get better slowly once the inventory levels return to normal and pricing stabilizes.
JP Morgan: Colgate Palmolive India was downgraded by the brokerage from an overweight to a neutral, and the target price was slashed from Rs 2,625 to Rs 2,400, signifying an upside of 5 percent from its previous closing price. The brokerage also mentioned that even though margins remained flat, slower sales growth was the main reason for the overall performance to decline.
Nomura: Nomura decided to keep its reduced call and cut its target to Rs 2,200 from Rs 2,350, signifying a downside of 4 percent from its previous closing price. The brokerage said that the YoY volume decrease of 8.5 percent is worse than expected and went further to say that any recovery in the second half of FY26 would be very limited.
Colgate-Palmolive’s second-quarter results reveal that the firm is suffering a bit of a short-term setback due to slow sales and a GST-led destocking. Although margins are holding up, the main worries are still weak volume growth and increasing competition.
The majority of brokerages have gone into a cautious mode, recommending holding or selling, as the company might take a while to recover. On the other hand, Jefferies considers this decline to be short-lived and is anticipating a recovery after the inventory situation improves.
Written by Satyajeet Mukherjee
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