Colgate-Palmolive (India) released its Q2FY2025 results, which were a mix of positive and negative outcomes. The company's revenue grew by 10% compared to the previous year, meeting expectations. However, the operating margins fell short due to increased advertising expenses.

The operating profit margin decreased by 206 basis points year-on-year, resulting in a modest 3.9% growth in profit after tax. The toothpaste segment showed resilience with high single-digit volume growth driven by core brands. The toothbrush category experienced double-digit growth, thanks to premiumisation strategies. However, the overall profitability was impacted by a significant increase in advertising costs, which were up approximately 18% year-on-year. The operating margins reported were 30.7%, lower than the expected 34%.

Currently, the stock is trading at high valuations of 59x, 53x, and 47x its earnings for FY2025E, FY2026E, and FY2027E, respectively. Considering the unfavorable risk-reward ratio, analysts recommend maintaining a Hold rating with a target price of Rs. 3,555.