Colgate Palmolive Share Price Surge 5.5% After Q1 Results; Brokerages Stay Positive

On July 30, Colgate Palmolive's stock soared by 5.5% in early trading, reaching an all-time high of ₹3,390. This surge followed the company's impressive April-June earnings, which received widespread acclaim from the market. Analysts were particularly pleased with Colgate's stronger-than-expected volume growth, fueled by a revival in rural demand.

At 09:45 AM IST, Colgate share price experienced a 5.5% increase, trading at ₹3,388. The trading volume surged over four times, with approximately 38,000 shares exchanged compared to the two-week average of around 9,500 shares on the BSE. Meanwhile, the S&P BSE Sensex rose by 0.1%, or 45 points, reaching 81,400 levels. 

On July 29, shares of Colgate closed 1.4% higher at ₹3,210 on the NSE. Nomura, a brokerage firm, remains optimistic about Colgate's volume growth of 6-7% in the first quarter of FY25, significantly surpassing their initial forecast of a 2% increase.

Nuvama Institutional Equities highlighted that Colgate is progressively reaping the benefits of rural recovery, with rural market growth outpacing urban markets for the second consecutive quarter. Anticipating balanced growth in FY25, as opposed to the pricing-led growth of FY24, Nuvama raised its price target for Colgate by over 13% to ₹3,745 and maintained its 'buy' rating.

Jefferies also expressed approval of Colgate's rural market growth, attributing it to robust execution. Consequently, the brokerage raised its price target to ₹3,570 and upheld its 'buy' recommendation. Jefferies noted that Colgate's impressive Q1 results led them to increase their earnings estimates for the company for the third consecutive quarter.

Emkay Institutional Equities acknowledged that Colgate addressed one of its primary concerns—low volume growth—with high single-digit toothpaste volume growth in Q1FY25. However, Emkay remains cautious due to the unresolved issue of business diversification and now projects high single-digit sales growth for Colgate from FY25 to FY27. Despite raising its price target by 13% to ₹2,850, Emkay retained its 'reduce' call on the stock due to limited earnings visibility.

Similarly, Nomura pointed out an unfavorable risk-reward scenario for Colgate, indicating that the company is entering a phase of moderate earnings-per-stock (EPS) growth. Consequently, Nomura maintained its 'sell' rating with a price target of ₹2,800, despite increasing its FY25-27 EPS targets by 1.6-4% to account for the strong Q1 performance.

Colgate reported a 33% increase in consolidated net profit, amounting to ₹364 crore for the April-June quarter of FY25. The company's net sales for the quarter stood at ₹1,485.8 crore, up 13% from ₹1,314.7 crore in the same period last year.

Additionally, Colgate's toothpaste portfolio experienced double-digit growth, driven by high single-digit volume growth, outperforming industry competitor Hindustan Unilever, which saw mid-single-digit growth primarily due to pricing. Colgate's EBITDA margins expanded by 240 basis points year-on-year to 34% in Q1, despite a 10% increase in advertising investment.