FMCG Stock: Should You Buy, Sell or Hold Colgate Palmolive after Q1 Results?

Synopsis:
Colgate Palmolive India faced a cautious response from brokerages post Q1 FY26 results, with JPMorgan cutting its target to Rs. 2,625 citing muted growth and a tough H1. EPS estimates were lowered by 6 percent. Other brokerages also trimmed targets, reflecting a subdued near-term outlook.

A leading player in the oral care and personal hygiene segment drew mixed reactions from brokerages after reporting its Q1 FY26 results, with most firms adopting a cautious stance on the company’s near-term outlook. Several brokerages slashed their target prices, citing muted growth and competitive pressures.

The company in focus is Colgate Palmolive India Ltd, with a market capitalization of Rs. 61,898.49 crore. It opened at Rs. 2,360 compared to its previous close of Rs. 2,378.35 and touched an intraday low of Rs. 2,270.55, marking a 4.5 percent drop from the last close.

What’s the News?

Brokerage houses turned cautious on Colgate-Palmolive (India) Ltd. following its Q1 FY26 results, with JPMorgan leading the commentary. The firm maintained its “Overweight” rating but cut the target price to Rs. 2,625 from Rs. 2,750, citing a tough first half and expectations of a back-ended recovery in the second. 

JPMorgan noted that higher trade promotions had led to muted price growth in Q1, but expected a return to positive territory in H2 with some stability in the competitive scenario, anniversarisation of prior promotions, and faster growth in the premium segment. It added that EBITDA margins should hold steady at 32–33 percent and revised its FY26–27 EPS estimates downward by 6 percent, driven by lower revenue forecasts.

Other brokerages echoed a mixed sentiment. HSBC maintained a “Hold” rating and trimmed the target price to Rs. 2,600 from Rs. 2,700, flagging a tepid growth outlook. Goldman Sachs maintained its “Sell” call with a target price of Rs. 2,300, highlighting a 4 percent decline in revenue and an 11 percent fall in EBITDA year-on-year. 

Citi also retained its “Sell” stance and lowered its target to Rs. 2,175 from Rs. 2,300. Nuvama, however, took a more bullish view, maintaining a “Buy” rating with a target price of Rs. 3,135. It acknowledged the softness in Q1 revenue and EBITDA, attributing it to weak urban demand and a high base. It also noted that toothpaste volumes declined 2 percent year-on-year, compared to a strong base of 8–9 percent. As per Bloomberg, out of 34 analysts tracking the company, 10 have a “Buy”, 12 suggest “Hold”, and 12 recommend “Sell”.

Also read: Smallcap stock jump 6% despite reporting 84% YoY drop in net profit

Q1 Results

Quarter-on-Quarter Performance, between March 2025 and June 2025, Colgate’s revenue from operations declined 2 percent from Rs. 1,463 crore to Rs. 1,434 crore. Operating profit dropped 9 percent from Rs. 498 crore to Rs. 453 crore. Profit before tax was down 9.6 percent from Rs. 478 crore to Rs. 432 crore. Net profit fell 9.6 percent from Rs. 355 crore to Rs. 321 crore. The company’s operating profit margin during the quarter stood at 32 percent.

Year-on-Year Performance, compared to the same period last year, Colgate’s revenue declined 4.2 percent from Rs. 1,497 crore to Rs. 1,434 crore. Operating profit dropped 10.8 percent from Rs. 508 crore to Rs. 453 crore. Profit before tax was down 11.7 percent from Rs. 489 crore to Rs. 432 crore. Net profit declined 11.8 percent from Rs. 364 crore to Rs. 321 crore.

FII holding in the company fell from 22.23 percent in March 2025 to 20.39 percent in June 2025, indicating reduced institutional interest in the stock during the quarter.

Management Commentary

Ms. Prabha Narasimhan, Managing Director & CEO of Colgate-Palmolive (India) Limited, said,  – “Our Q1 results reflect persistent headwinds from tough operating conditions on account of subdued urban demand and elevated competition intensity. The current quarter performance is also influenced by cycling a high base from the previous year; Net Sales grew at 12% CAGR in the base year same period (Q1 FY23-Q1 FY25).”

Ms. Prabha on Strategy and Brand Investment – “We continued to work towards execution of our strategic priorities. We have made good strides in category premiumization, with our premium portfolio delivering strong revenue growth. We also prioritized brand investment, leveraging our healthy profit margins. We expect to navigate the current challenges and anticipate a gradual recovery in the back half of the year.”

Ms. Prabha on New Product Launches – “Doubling down on innovation this quarter, we introduced two new innovative formats under our Kids and Mouthwash portfolios. For children aged 3-6, we launched Colgate Kids Squeezy Toothpaste in Strawberry and Watermelon flavors. Its easy-to-squeeze bottle and fun grip are ideal for small hands. We also launched MaxFresh Mouthwash Sachet Stick in Fresh Tea Flavor, catering to on-the-go freshness needs.”

Written by – Manan Gangwar

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