Hold Colgate Palmolive; target of Rs 1837: Prabhudas Lilladher

Key Investment Pillars

• Premium segments led by Max Fresh gel continue double-digit revenue growth momentum, driving volume growth of ~8% in Q2FY27.
• Gross margins expanded by 44bps YoY to 69.9%, despite high input costs.
• EBITDA margins contracted by 287bps YoY to 27.8% due to higher A&P spends.
• The company declared an interim dividend of Rs24/share.

Thesis Validation Checklist

To validate the Hold thesis, watch for:

• Sustained premium segment growth, particularly in Colgate Total, Max Fresh, and Visible White.
• Margin expansion driven by easing input costs and improved operating leverage.
• Volume growth in line with or ahead of market expectations, driven by distribution expansion and new product launches.
• Any signs of peaking A&P spends and potential reduction in competitive intensity.