Shares of Colgate-Palmolive India fell more than 3 percent on Tuesday, August 18, after brokerages turned cautious on the company’s near term earnings outlook following its Q1 FY27 analyst call. The key concern is that higher advertising and brand investments required to support premiumisation and accelerate growth could weigh on profitability.

Colgate-Palmolive India shares were trading at around Rs 1,904 in morning deals, down 3.1 percent, making the stock one of the top midcap losers. The shares have declined 8.7 percent so far in 2026, compared with a 7.3 percent decline in the Nifty 50. The company has a market capitalisation of more than Rs 52,000 crore.

Brokerages broadly expect revenue growth to be supported by volume expansion, pricing and a greater contribution from premium products. However, Citi, CLSA and HSBC have highlighted the potential earnings trade-off from increased marketing expenditure. Higher investments could result in earnings growth trailing revenue growth and limit the scope for margin expansion.

Citi maintained its Sell rating on Colgate-Palmolive India with a target price of Rs 2,000 per share. The brokerage expects growth to remain balanced across volumes, pricing and product mix, while noting that the premium segment is growing around six times faster than the overall category. However, it expects higher brand investments to keep earnings growth below revenue growth.

CLSA retained its Hold rating with a target price of Rs 2,024. The brokerage expects Colgate’s high gross margins to provide room for increased advertising expenditure. Around 60 percent of the company’s advertising spending is digital, which CLSA believes is supporting faster growth in premium products. While CLSA raised its growth and gross margin assumptions, it lowered its FY27 and FY28 earnings per share estimates to reflect higher advertising expenditure.

HSBC also maintained its Hold rating, with a target price of Rs 2,140. The brokerage identified premiumisation and higher usage frequency as key growth drivers and described the company’s premiumisation strategy as encouraging. However, it expects revenue growth to outpace profitability as marketing expenditure increases.

Jefferies remained more positive, retaining its Buy rating and target price of Rs 2,650. The brokerage expects premiumisation, volume growth and pricing to accelerate revenue growth. It acknowledged that margins could remain range-bound as management prioritises investments in growth, but believes the additional spending can support stronger revenue expansion over time.

The brokerage commentary followed Colgate-Palmolive India’s Q1 FY27 analyst call. The company reported a 7 percent year-on-year increase in net profit to Rs 343 crore, while revenue rose 11.8 percent to Rs 1,603 crore. EBITDA increased 6.7 percent to Rs 483 crore, although the EBITDA margin declined to 30.1 percent from 31.6 percent in the corresponding quarter last year.