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Colgate Palmolive gets multiple downgrades after Q4 results due to ‘rich’ valuations

Many analysts who follow Colgate-Palmolive (India) Ltd. believe that the risk-reward offered by the shares at current market prices is “unfavourable”.

Here’s a look at the target price for Colgate-Palmolive stock:

BrokerageRatingTarget price (next 12 months)
NomuraReduce₹2,450
HSBCSocket₹2,900
JeffriesBuy₹3,020
Emkay GlobalSell₹2,350

Colgate-Palmolive shares are up 60% over the past 12 months and have gained nearly 8% in 2024 so far.

Nomura downgraded the stock to ‘Reduce’ with a price target of ₹2,450. The price target implies a potential downside of 8% from Wednesday’s closing levels.

The global brokerage firm believes that the company’s earnings growth will moderate going forward as it sees limited margin improvement. Overall volumes continue to be under pressure, the brokerage said.

Nomura said the stock was trading at 45 times fiscal 2026 earnings per share (EPS).

HSBC believes Colgate’s earnings outlook is normalizing and the valuation appears high. The brokerage downgraded the meter to ‘Hold’ and revised its target price downward to ₹2,900 per share.

Colgate has performed well over the past year, which is now weighing on its strong results, HSBC noted.

The brokerage said it was unlikely that the company’s margin expansion at the pace seen last year would continue.

Jefferies, meanwhile, remains bullish on Colgate, believing management’s focus on growth to be encouraging. He said the company reported strong results for the March quarter.

The global brokerage has a ‘Buy’ call on Colgate stock, with a price target of Rs 3,020 per share.

The company’s outlook for FY25 remains positive, with rural areas expected to perform better.

However, it highlighted that the lack of disclosure on volume growth is disappointing compared to its Indian peers and its parent company.

Domestic brokerage Emkay Global retained a ‘sell’ rating on high valuations with a price target of ₹2,350 per share.

“Our selling demand in Colgate has been a factor in limited earnings visibility in the medium term, as high margin bottoms out and structural growth remains elusive,” the brokerage said.

Emkay said slowing volumes were a concern and he saw growth as the key moving forward.

The brokerage maintained its estimates and expects a CAGR of 8% in sales and 9% in profits over FY24-26.

Of the 35 analysts that follow Colgate, eight of them have a “Buy” recommendation, 12 say “Hold,” while 15 have a “Sell” recommendation on the stock.

Shares of Colgate-Palmolive were trading 0.39 per cent higher at ₹2,683.10 apiece on the NSE in today’s opening session.

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