PL First Cut - Colgate Palmolive 1Q24

PL First Cut – Colgate Palmolive 1Q24 – *Amnish Aggarwal – Head of Research, Prabhudas Lilladher Pvt Ltd*

Colgate Palmolive 1Q24 – Beat on all fronts; Estimate volume growth at 4.5%

(CMP: Rs1878|Hold)

Financial Performance

> Revenues grew by 10.6% YoY to Rs13.2bn (PLe: Rs12.5bn)

> Gross margins expanded by 211bps YoY/157bps QoQ to 68.4% (PLe: 66.3%)

> EBITDA grew by 28.4% YoY to Rs4.2bn (PLe:Rs3.5bn); Margins expanded by 438bps YoY/-187bps QoQ to 31.6% (PLe:28.2%)

> A&P spends expanded by 8bps YoY/312bps QoQ to 13.7%

> Adj. PAT grew by 33.9% YoY to Rs2.9bn (PLe:Rs2.4bn)

Key Highlights

> Strong growth driven by good execution with strategy focussed on growing the oral care category

> Colgate sees early signs of recovery in rural markets and remain optimistic about continued improvement

> Colgate Strong Teeth re-launched with improved formula and new communication

> Launched Colgate India’s first ever whitening pen with dentist partners

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CLGT reported a beat on our/street estimates. We estimate volume growth of 5% supported by a favourable base (-3% in 1Q23). Early signs of recovery in rural markets is a positive which will help support demand. 1Q saw the relaunch of Colgate Strong Teeth with Arginine & whitening pen. The quarter also saw higher ad spends (312bps QoQ) which helped to spur demand. We have a Hold rating on the stock with a TP of Rs 1636.

Stock trades at 40.7x FY25 EPS