Colgate’s multi-quarter high Q1 revenue growth, margin brightens investors day
₹2009.90 per share. Performance outshone expectations, with both revenue and margins surpassing forecasts. The company’s gross margin reached a multi-quarter high of 68.4% in Q1, reflecting a year-on-year expansion of 211 basis points (bps).
Ebitda (earnings before interest, tax, depreciation, and amortization) margin also swelled by 440 bps year-on-year to 31.6%, even as the company allocated part of these gains to advertising and promotions. Colgate’s operating revenue also witnessed a substantial rise of 10.6% year-on-year, reaching ₹1,324 crore, overshooting analyst expectations of a 7-8% growth. The upswing was primarily driven by its domestic business, with toothpaste sales marking a high double-digit growth.
Consequently, the company’s Q1 revenue growth has been the highest in the last eight quarters. It’s worth noting that competitors, Hindustan Unilever Ltd and Dabur India Ltd, also performed commendably in the oral care category in Q1. Colgate’s revenue growth last quarter was led by price and volume.
“Underlying volumes grew mid-single digits (estimate), which is still the highest in the last two years. We note that this was on a soft base (3-4% decline) and two-year volume CAGR remains soft at about 1%," said analysts at Jefferies India in a report on 26 July. Encouragingly, Colgate is witnessing early recovery signs in rural markets and remains optimistic about ongoing improvements.
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