Colgate Palmolive (India) Ltd.’s shares went up by 6.80 per cent after the company reported its Q1 FY24 performance. The quarter ended June 30, 2023, saw a significant increase in revenue and net profit; the company’s revenue from operations for the quarter was ₹1,314.7 crore, which is a 10.8 per cent growth compared to the same quarter last year when it was ₹1,186.5 crores.
The net profit was ₹273.68 crore (₹209.67 crore), indicating a surge of 30 per cent. The company experienced 12.3 per cent growth in domestic sales, driven by an approximate 8 per cent price increase.
Key drivers of this growth were the successful execution of its oral care category strategy, including the relaunch of its flagship product, CDC, with Arginine technology and early signs of recovery in rural markets. Additionally, the company’s gross margin improved to 68.2 per cent, indicating a positive trend.
Also read: Saying it with a Colgate smile
Despite these positive results, Colgate faced challenges in the toothbrush category due to increasing competition from Oral-B, and its export sales declined steadily over the past few quarters. However, with the relaunch of India’s first-ever Whitening pen in partnership with Dentist partners, the management expects high single-digit growth for FY24.
Shirish Pardesi, a Research Analyst at Centrum Broking Ltd., said, “Though management indicated early signs of demand recovery in rural markets, also echoed by Dabur’s management, we believe CLGT would turn its performance positive. That said, we had argued earlier that CLGT will have to increase its ad spend, which is now visible, and it may show up in increased penetration for toothpaste. We believe the gradual recovery in the oral care category and category pain would subside in the next few quarters.”
The stock price went up by 6.80 per cent to ₹2,011 at 12.30 p.m. on BSE.