Colgate Q3 Results Review - Volume Pressure Continues To Dampen Performance: Dolat Capital

Dolat Capital Report

Colgate Palmolive India Ltd.’s Q3 FY23 revenues came inline but Ebitda and adjusted profit after tax were below of our estimate. We believe that the company has reported mid-single digit volume de-growth during the quarter – sixth consecutive quarter of muted volume performance.

Gross margin contracted by 70 basis points due to high inflation, but improved 210 bps sequentially. Apart from lower price pass on, decline in volume suggests signs of weakening of brand strength.

Company’s focus on driving growth via increasing oral care pie in India through innovation across is core and developing new segments are key growth drivers over the medium to long term. However, increase in competition and better product offerings by competitors like Dabur India Ltd. and Patanjali remains a key challenge for Colgate.

We have downward revised our FY23/24/25E earnings per share estimates to Rs 37.5/41.3/45.2. Slowdown in the oral care industry and increased competition for Colgate remain key challenges for the stock performance.

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