Colgate, HUL, Marico bank on demand revival to turn around their fortunes

Time of India

3 days ago

ET Intelligence Group:
Colgate-Palmolive
(India) declined nearly 7% in eight trading sessions after reporting a lacklustre set of numbers for the March quarter. The performance of the oral healthcare company was hit by flat sales volume and urban softness though rural markets and premium products offered some support. The management has guided for a gradual revival in demand from the second half of FY26, as macro pressures ease and premium offerings gain ground.
The country's rural parts continued to outperform urban markets for the third straight quarter. According to the company management, the bottom 70% of the urban consumer base was under stress while premiumisation continued to be strong. The company launched new products such as
Colgate
Max Fresh Sensorials, Total Plaque Release, and the reformulated Strong Teeth, to strengthen its premium segment.
Colgate's revenue and net profit declined by 1.9% and 6.5% to ₹1,452 crore and ₹355 crore, on year-on-year basis in the March quarter. Volume growth was flat, marking a sharp deceleration from the previous three quarters of mid-single-digit growth. The operating margin before depreciation and amortisation (Ebitda margin) slipped by 164 basis points year-on-year to 34.3%.
Despite the muted fourth-quarter numbers, Colgate closed FY25 on a stable note. Revenue from operations for the year rose 6.3% to ₹5,999 crore while net profit grew 8.5% to ₹1,437 crore. Ebitda margin dropped to 32.6% from 35.9%, a year ago.
The other major consumer companies including
Hindustan Unilever
(HUL) and
Marico
also reported pressure on margins for the March quarter. HUL's revenue and net profit recorded near flat growth whereas margin remained range-bound at around 23%. Marico's consolidated revenue and net profit grew 20% and 8% year-on-year, but Ebitda margin fell by 260 basis points to a 12-quarter low of 16.8%.
The
FMCG companies
expect a revival in the current fiscal year given the expectation of a normal monsoon and income tax relief, which are expected to improve consumer spend.
HUL expects business momentum to gradually improve with the first half of FY26 likely to be better than the second half of the previous fiscal year.
Marico expects the next fiscal year to be better.
Analysts expect demand weakness to persist in the near term.
Emkay Global Financial Services
has maintained a 'sell' rating on Colgate with a target price of ₹2,000, citing weak growth visibility and limited room for margin expansion. While Axis Securities has reduced the target price by 4% to ₹2,830, the brokerage has retained a 'buy' rating on the stock noting that the recent fall in its price offers a strong margin of safety.