On Wednesday, BofA Securities adjusted its price target for Colgate-Palmolive (NYSE:CL) India (CLGT:IN) to INR2,930 from the previous INR2,955 while maintaining a Buy rating on the stock. The revision follows the company's third-quarter financial results for the fiscal year 2025, which were reported to be aligned with market estimates.
Colgate-Palmolive India disclosed a net profit of Rs3.2 billion, a slight 2% decrease year-over-year, and revenue of Rs14.6 billion, marking a 5% increase from the same period last year. Despite the revenue growth, the figures fell just short of expectations. The toothpaste segment of the business continued to exhibit a stable volume growth, registering mid-single-digit increases. However, the aggressive promotional activities have seemingly affected both the top-line revenue and the gross margin, in the context of a challenging market.
The company's operational expenditure, particularly advertising and promotional (A&P) spending, was effectively managed, showing a year-over-year reduction of 2%. This was noteworthy given the significant investments in brand and category-building campaigns, suggesting a more strategic allocation or a shift in the marketing spend mix.
Looking ahead, BofA Securities anticipates some sequential improvement in the company's performance over the upcoming quarters. The firm commends the management's efforts to stimulate long-term consumption and drive premiumization within the product category. Colgate-Palmolive India is expected to continue adapting its pricing strategies to cope with the fluctuating operational landscape.
In light of the recent financial outcomes, BofA Securities has made minor adjustments to its earnings estimates for Colgate-Palmolive India, ranging from 0 to 1%, leading to the revised price objective. The firm reasserts its Buy rating, signaling confidence in the stock's future performance despite the near-term market volatility.
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