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Informist, Monday, Jul. 21, 2025

By Simran Rede

MUMBAI - Colgate-Palmolive (India) Ltd. is expected to report weak earnings for the June quarter due to a slowdown in urban demand, along with a decline in volume growth compared to a year ago as well as a quarter ago. Higher competition and no growth in pricing are also likely to impact the fast-moving consumer goods company's financials for the reporting quarter, according to analysts.

Analysts are divided on the outlook of the company's gross margin. While Nuvama Institutional Equities expects the gross margin to decline 45 basis points on year to 70.2% for Apr-Jun, Motilal Oswal Financial Services sees it rising 35 bps on year to 71%. On the other hand, Prabhudas Lilladher Institutional Equities and Kotak Institutional Equities expect the gross margin of Colgate to remain stable at 70.65%. The stable outlook is based on cost management initiatives that are expected to offset the impact of investments made in formulation and trade and consumer expenses, Kotak Equities said.

Colgate is expected to post a net profit of INR 3.45 billion for the June quarter, down 5% on year, according to the average of estimates from 13 brokerages. Sequentially, Colgate's net profit is expected to fall nearly 3%. The highest estimate of INR 3.80 billion for net profit is from Nirmal Bang Equities Pvt. Ltd. and the lowest estimate of INR 3.34 billion is from Systematix Shares and Stocks (India) Ltd.

The company is expected to post revenues of INR 14.75 billion for the quarter, down 1.4% on year. Sequentially, however, the company's revenue is expected to grow nearly 1%. Nirmal Bang has the highest estimate for revenue at INR 15.43 billion and the lowest estimate of INR 14.42 billion is from JM Financial Institutional Securities Pvt. Ltd.

The FMCG major's earnings before interest, taxes, depreciation, and amortisation are likely to decline 6-7% in the June quarter due to continued aggressive trade and consumer promotions amid high competition in the industry. The company is expected to post an EBITDA of INR 4.85 billion for the quarter. The highest EBITDA estimate of INR 5.28 billion is from Nirmal Bang and the lowest estimate of INR 4.66 billion is from Elara Securities (India) Pvt. Ltd.

Colgate's EBITDA margin is also seen contracting 130-160 basis points on year to 32.4-32.7%. The decline in the company's EBITDA margin is due to low realisations, higher expenditure on advertisements, and negative operating leverage, given its focus on pushing premium products and spreading awareness about brushing twice daily.

Brokerages expect volume growth to be flat or decline as much as 3% on year in the June quarter due to a slump in demand in urban markets and a high base of 6% in the year-ago quarter. Systematix expects volume to decline 3% on year, Kotak Institutional sees a 2% decline, and Emkay Global Financial Services expects it to remain unchanged on year. 

The company will declare its financial results for the June quarter on Tuesday. At 1235 IST, shares of Colgate traded marginally higher at INR 2,399.10 on the National Stock Exchange. The stock has fallen nearly 4% since it detailed its March quarter earnings on May 21. In the March quarter, the company's net profit had fallen over 6% on year to INR 3.55 billion and its revenue had fallen nearly 2% on year to INR 14.52 billion.

Of the 21 brokerage reports available on the stock with Informist, nine have a 'buy' or equivalent rating on the stock, seven have a 'hold' or equivalent rating, and five have a 'sell' or equivalent rating. Of the 'buy' recommendations, Nuvama has the highest target price of INR 3,250 on the stock and KR Choksey Research has the lowest target price of INR 2,721.

Following are the June quarter earnings estimates for Colgate Palmolive (India) based on reports from 13 brokerages in descending order of estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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