Colgate-Palmolive (India) Ltd’s total operating revenues grew 11.8% year-on-year in the June quarter (Q1FY27), the strongest performance in the past eight quarters. Larger rival Hindustan Unilever’s oral care category reported mid-single digit growth last quarter.
Colgate’s Q1 volume growth, estimated in high single digit, was largely better than expectations. The company said premium toothpaste delivered a stellar show, coupled with sustained growth in its core portfolio.
But investors aren’t thrilled; the stock is down 2% since results were declared. This could be because Q1FY27 growth was also aided by a favourable base – Q1FY26 revenue had declined 4.2%.
Moreover, Q1FY27 Ebitda grew at a slower pace of 6.7% year-on-year to ₹483 crore, with margin contracting by 144 basis points (bps) to 30.1%, mainly because advertising expenses jumped 34% to ₹252 crore. In contrast, gross margin expanded by 104 bps to 70% on the back of cost-saving initiatives. Colgate leveraged the strong gross margin to increase its focused investments in brand building and category premiumization throughout Q1.
Amid commodity price volatility driven by geopolitical uncertainties, the company intends to manage its margin profile through cost-saving initiatives and calibrated pricing actions.
Input cost inflation is likely to cause a slight moderation in gross margin in Q2, while a likely rise in A&P spends will limit Ebitda margin, points out Nomura Research, adding, “However, the full impact of mid-single-digit pricing growth is likely to ease some pressure and drive double-digit Ebitda growth from Q2.”
Revenue growth could get a fillip in Q2, given last year’s favourable base. In Q2FY26, revenue declined 6.2% year-on-year, and volume was down around 8%. Further, higher ad spend should aid volume growth ahead.
Fresh launch
Innovation was a focus area in Q1FY27. Colgate launched MaxFresh Berry Blast. In its toothbrush portfolio, it expanded premium offerings by introducing the Colgate Total Active Prevention Foaming Clean Toothbrush. “The premiumization trend continues, led by the new launches, in our view,” said Jefferies India’s analysts.
Colgate’s shares have gained just about 1% so far in 2026. For investor sentiment to improve, sustaining revenue growth ahead remains crucial for the company. “Valuations at 38x price-to-earnings are at the lower end of the sector and a continued growth momentum could help bridge some of the gap with peers,” reckons Jefferies.