Colgate-Palmoliv (COLPAL)

FairStock Score: 63/100 — STEADY

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 1/2 · Dividend: 1/1

Key Financials

Strengths

• Extraordinary profitability: ROE 79.72% and ROCE 105.34%
• Near-zero debt with Debt/Equity of 0.02 and strong Altman Z-Score of 16.72
• Consistent cash generation: Free Cash Flow of ₹433 Cr and dividend yield of 2.26%
• Solid 5-year revenue CAGR of 11.66%, showing brand durability
• Healthy Piotroski F-Score of 8/9 indicates operational efficiency

Concerns

• Recent negative momentum: Sales growth -2.73% and Profit growth -9.21%
• Extreme valuation: P/E 45.99 and P/B 35.13 leave no margin of safety
• Price of ₹2,150.20 is far above Graham Number of ₹259.19 and DCF value of ₹579.79
• Negative EV/EBITDA of -20.98 is a red flag that needs careful investigation

AI Analysis

Let me start with what I admire. Colgate-Palmolive India is exactly the kind of branded consumer franchise I like: 51% controlled by the parent, virtually debt-free with a debt-to-equity of 0.02, and earning an extraordinary ROE of 79.72% and ROCE of 105.34%. It generates real cash—free cash flow of ₹433 Cr—and pays a dividend yield of 2.26%. The Altman Z-Score of 16.72 and Piotroski F-Score of 8/9 tell me the balance sheet is strong and operations are efficient. A five-year revenue CAGR of 11.66% confirms the durability of this toothpaste franchise and its pricing power. No wonder the market treats it like a castle. But the price is the problem. At ₹2,150.20, I am being asked to pay 45.99 times earnings and 35.13 times book value. Graham would remind me that no brand is so wonderful that it cannot be overpaid for. The Graham Number, my conservative estimate of tangible value, is ₹259.19; even the more generous DCF figure of ₹579.79 is far below the current price. That leaves a margin of safety of negative 769.82%. Meanwhile, the latest quarter shows weakness: sales fell 2.73% and profits declined 9.21%. The negative EV/EBITDA is another puzzle that demands explanation, even if other financial metrics look healthy. A wonderful business can still be a poor investment if bought at the wrong price. I would rather wait for the price to offer me a real margin of safety. Colgate is a fine company, but today it fails my value discipline.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer