Motilal Oswal has turned bullish on Colgate, recommending a Buy rating with a target price of ₹2,000 in its research report dated October 22, 2026. The brokerage's optimistic stance contrasts with the mixed reactions from other major brokerages, as Jefferies maintained a Buy rating while Citi and Goldman Sachs retained Sell recommendations. All three brokerages cut their target prices, indicating concerns over underlying growth, margin pressure from higher advertising spend, and the sustainability of the company's growth investments. Motilal Oswal's target price of ₹2,000 is based on 30x Sep'28E EPS, reflecting confidence in the company's strategic direction under new leadership.
Colgate-Palmolive India delivered robust Q2FY27 results with net profit rising 4.3% year-on-year to ₹341.57 crore compared to ₹327.51 crore in the corresponding period last year. The company achieved sales growth of 12.2% to ₹1,691.57 crore from ₹1,507.24 crore in Q2FY26, marking the second consecutive quarter of double-digit sales growth. As reported by NDTV Profit, the net profit growth of 5.5% year-on-year after excluding one-offs and exceptional items, including the impact of an inverted duty structure-related charge following GST changes. The performance was driven by high-single-digit volume expansion in the toothpaste portfolio, led by the premium toothpaste range and Colgate MaxFresh, with the company reporting broad-based growth across brands and distribution channels. The increase in demand for premium offerings remains a key growth driver for the company's continued expansion. The company continues to focus on innovation and premiumisation as it launched Harry Potter-themed oral care products and a Bluey-themed toothpaste featuring a vacuum-locked pump dispenser.
Colgate's gross margin improved 40 basis points year-on-year to 69.9% in the September quarter, aided by price hikes of 4-5% taken at end May'26 on certain stock keeping units of Strong Teeth, MaxFresh Blue, Visible White Purple and cost savings to mitigate input-cost inflation. However, Q2 FY27 operating profit margin contracted by a sharp 290 basis points year-on-year and 240 basis points quarter-on-quarter to 27.8% - its lowest level in more than four years. As reported by NDTV Profit, the company said it would continue to respond to commodity-cost fluctuations through cost savings and calibrated pricing actions. Managing Director and CEO Manish Anandani emphasized the company's commitment to navigating commodity-cost fluctuations through disciplined cost savings and calibrated pricing actions, while using its margin position to step up brand-building investments. The company expects to deliver robust growth, supported by its science-backed product portfolio and strategic advertising investments. While gross profit margins expanded 40 basis points Y-o-Y to 69.9% and gross profit was up 13% Y-o-Y, operating profit margins were under pressure due to multiple cost heads.
Advertising and promotion spend was stepped up even more sharply by 40% year-on-year to constitute 18.5% of sales - the highest share of revenue going into brand investments in more than 11 years. As indicated by management at the recent Investor Day 2026, this represents reinvestment of gross margin accretion from cost savings to drive higher growth in the premium portfolio. According to NDTV Profit, this aggressive ramping up of advertising and promotional spend to defend market share has emerged as a key strategic focus area for the company. Other expenses and employee expenses also saw growth of 9% and 15% respectively, contributing to the margin pressure. Elara Research has cut its earnings estimates to factor in higher advertising spends, reducing earnings per share by 2.5-3% for the next three years, with analysts noting that the company faces challenges in achieving sustained double-digit earnings growth. The operating profit growth of 2% was below estimates due to higher-than-expected advertising spends.
While Colgate continues to grow ahead of the market in premium segments, PL Research points out that rising competition and inflation are impacting growth in Colgate Strong Teeth (mass market) and Ved Shakti (natural/Ayurvedic). Analysts led by Amnish Aggarwal of the brokerage factor in 5.3% volume growth over FY26-29, driven by strong double-digit growth in premium segments like Colgate Total, MaxFresh, Visible White and a renewed thrust on the sensitive segment. The brokerage has cut its target price from ₹2,114 to ₹1,837 while maintaining a hold rating as the stock is attractively valued at 26.6 times FY29 earnings, with the 3% dividend yield limiting downside. Elara Research has a reduce rating with a target price of ₹1,600, citing challenges in achieving sustained double-digit earnings growth. The recent capacity announcement by competitor Haleon (brands such as Sensodyne and Parodontax), entailing capex of ₹2,000 crore, would only intensify competition. All three brokerages have lowered their target prices, signalling a more cautious assessment of Colgate's near-term prospects, with the key monitorable being whether higher advertising and brand investments translate into sustained volume growth and category development.
