After a quiet run in recent quarters, Colgate-Palmolive (India) might finally be gearing up for a comeback. In a fresh note, Motilal Oswal has upgraded the stock to a ‘Buy’ rating with a target price of ₹2,850, hinting at a 25% upside from current levels.
So, what’s driving this renewed optimism around the toothpaste giant? The brokerage firm believes a mix of tax relief, premiumisation, and rural growth could help Colgate regain its shine.
1. Margins Stay Strong Despite Weak Quarter
Colgate’s September quarter (Q2FY26) wasn’t exactly dazzling. The company reported a 6% drop in revenue year-on-year to ₹1,520 crore, with volumes slipping about 5%.
But here’s the silver lining — margins held up well. According to Motilal Oswal, Colgate’s gross margin expanded by 100 basis points YoY to 69.5%, while EBITDA margin stayed flat at 30.6%. That’s impressive resilience in a sluggish quarter.
The firm noted that Colgate’s focus on premium products and consistent brand investments helped it cushion the impact of weak volumes. In other words, fewer tubes sold — but more expensive ones.
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2. GST Relief Could Spark a Demand Boost
One of the biggest positives, according to analysts, is the GST rate cut on oral care products — from 18% down to just 5%.
That’s a major relief for Colgate, as the new rate covers about 95% of its portfolio. Lower taxes mean cheaper products for consumers and higher volumes for the company.
Motilal Oswal believes this change could kickstart Colgate’s recovery momentum, especially in price-sensitive rural markets where affordability drives sales.
3. Innovation and Rural Push to Power Growth
Colgate seems to be changing its playbook. The company is now focusing more on new product launches, science-backed formulations, and premium innovations — all aimed at boosting realisations.
At the same time, it’s stepping up efforts to deepen its rural reach, targeting new customers and increasing brand frequency in small towns and villages.
The brokerage report added that Colgate’s broader goal is to reduce dependence on oral care alone, possibly exploring adjacent personal care categories over time.
Valuation: Time to Smile Again?
After dropping nearly 30% over the past year, Colgate’s stock now looks relatively attractive.
Motilal Oswal says the stock is trading at a comfortable 40x P/E on FY27 earnings, which they see as fair for a company with a strong moat and improving fundamentals.
Their ₹2,850 target values the stock at 45x Sep’27 earnings, implying solid upside if growth trends play out as expected.
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Bottom Line
Colgate’s not out of the woods yet — volume recovery will take time, and competition in the FMCG space remains fierce. But with a friendlier tax regime, sharper focus on premium products, and renewed energy in rural markets, the groundwork for a turnaround seems to be in place.
Motilal Oswal’s upgrade could be an early sign that the market is ready to smile again at Colgate.
