Beaten-down stocks Part 5: Colgate-Palmolive India can be a great buy

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India’s equity market has weakened after two straight years of strong double-digit gains. The benchmark BSE Sensex fell 4.8 per cent in the 12 months to September 2025, marking its poorest annual showing in over a decade. This contrasts with a 28.1 per cent surge in the year to September 2024 and a 14.6 per cent rise in the prior year. As a result, the index has now delivered negative returns in three of the past six years ended September.

 

The latest decline has, however, pulled down valuations from the record highs of 2024. Several blue-chip stocks are now trading at more appealing levels, creating opportunities for long-term investors. Still, caution is warranted as valuations across the wider market remain above long-term averages, making selective investing essential.

 

Against this backdrop, personal-care fast-moving consumer goods company Colgate-Palmolive India has stood out. Its stock has slumped 41.7 per cent over the past year. Yet it offers a mix of relatively low valuations, steady earnings over recent quarters, and a return on net worth of 83.7 per cent. This combination provides investors with downside protection in a weak market along with room for gains when sentiment improves. 

 

Why buy Colgate-Palmolive India?

 

• Recovery outlook: The company expects a gradual recovery in the second half of FY26, after recent quarters were held back by weak urban demand and heightened competition.
• Segment dynamics: While the entry-level toothpaste segment is under demand pressure, the premium segment continues to post healthy growth.
• Pricing advantage: Ninety-five per cent of its portfolio — covering toothpaste and toothbrushes — has seen GST rates reduced, enabling the company to cut prices by 7-14 per cent.
• Long-term growth: Colgate’s prospects remain supported by its core toothpaste brands and premiumisation strategy through science-backed innovations, with valuations appearing fair at 42x FY27 earnings — in line with the five- and ten-year range of 41–42x.

   

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