Colgate Palmolive hits 52-week low; slips 40% from Oct high on soft demand

Colgate Palmolive (India) share price hit a 52-week low of ₹2,344, falling 3 per cent on the BSE in Tuesday's intraday trade. The stock price of the personal care products company has slipped 40 per cent from its 52-week high level of ₹3,893, which it touched on October 4, 2024.

 

In the past two months, shares of Colgate Palmolive (India), the market leader in oral care in the country, has underperformed the market by falling 15 per cent, after it reported weaker-than-expected December 2024 (Q3FY25) results.

 

In Q3FY25, the company reported net sales of ₹1,452 crore, clocking a growth of 4.7 per cent year-on-year (Y-o-Y). Gross margin and earnings before interest, tax, depreciation and amortisation (Ebitda) margin showed sequential improvement over the previous quarter, but they contracted from last year's high base. Net profit after tax for the quarter was at ₹322.8 crore as compared to ₹330.1 crore for the same period last year.  ALSO READ |  Stock Market LIVE: Sensex flat at 78,000; Nifty at 23,700; PSB, metal, pharma drag; IT holds

 

The company highlighted a weak demand environment, especially in urban markets, suggesting a potential deceleration in consumer activity or a shift in purchasing patterns. This softness persisted into January, with no significant improvement in demand. To address this, the company has ramped up promotional activities, particularly offering more freebies in urban markets.

 

The management said the December quarter saw relatively soft demand, particularly in the urban market. In these market conditions and a heightened competitive landscape, the company delivered a resilient performance with Toothpaste reporting mid-single digit intrinsic volume growth and continued competitive growth on toothbrushes.

 

KRChoksey Shares and Securities said Q3FY25 performance reflected modest revenue growth despite a sequential decline, driven by volume expansion in the toothpaste segment. Urban demand remained weak amid inflationary pressures, while rural growth outpaced but remained gradual. Increased promotions and a strong premium portfolio supported sales, though margins contracted due to a high base. The company expects similar trends to continue.  ALSO READ | BSE MidCap, SmallCap indices snap 5-day winning run, fall up to 2% today

 

The brokerage firm, thus, lowered its FY26E/FY27E adjusted EPS estimates by 6.5 per cent/7.0 per cent, factoring in weaker-than-expected Q3FY25 results, a challenging operating environment, and intensified competition.

 

"The company is committed to delivering sustainable and profitable growth, driven by science-backed innovations. Its premium portfolio has shown positive momentum, contributing to its resilient performance in a challenging environment with soft demand and increased competition. With a strong innovation pipeline, including new product launches and investments in artificial intelligence (AI)-generated dental screening reports and advertising, the company is well-positioned for long-term growth," analysts at Geojit Financial Services said.