Colgate-Palmolive India grew sales at double digits for a second straight quarter, recovering from last year’s GST disruption. But it increased advertising so sharply that profit barely grew, a choice that says a lot about competition in Indian toothpaste.
Colgate-Palmolive India grew its sales by 12.2% in the September quarter to ₹1,692 crore. It increased advertising by almost 40%. Those two numbers explain most of the quarter.
Advertising spend rose to ₹314.82 crore from ₹225.10 crore a year earlier, more than three times faster than sales. As a result, the operating margin narrowed from 30.63% to 27.76%, a fall of nearly three percentage points. Net profit rose only 4.3% to ₹341.57 crore, below analyst estimates of about ₹364 crore. EBITDA was almost flat at ₹473.48 crore.
Colgate’s gross margin actually improved by 40 basis points to 69.6%, thanks to cost savings and careful pricing. Making and selling toothpaste is as profitable as ever. The margin pressure came entirely from Colgate’s decision to spend more on promoting its brands.
Why Colgate is spending now
The decision makes more sense against last year’s numbers. In the September quarter of 2025, the government cut GST on oral care products from 18% to 5%. The change disrupted distributors and retailers while they adjusted prices and stock, and Colgate’s sales fell 6.3% that quarter. This year’s 12% growth partly reflects that weak comparison, but it is also the second straight quarter of double-digit growth in the domestic business, which suggests a real recovery.
Colgate appears to be using the recovery to strengthen its position. Management said the extra spending was aimed at building brands and moving customers towards premium products. Indian toothpaste is more competitive than it looks.
Colgate dominates the market, but Dabur, Patanjali and newer direct-to-consumer brands have been competing hard, especially with herbal and natural products. The lower GST rate has also made premium toothpaste cheaper for many households, which gives Colgate a chance to move customers up to higher-priced products.
The approach is to spend more now to protect volumes and push premium products, accepting lower margins in the short term.
If it works, Colgate’s revenue will grow faster in the coming quarters and margins will recover as spending returns to normal. If competitors respond with their own spending, the industry could end up spending more on advertising without anyone gaining share.
Colgate’s results also say something about Indian consumers. Elsewhere in this earnings season, mass-market companies are struggling with high inflation. Toothpaste is an essential purchase, and essentials hold up better when budgets are tight.
Colgate’s double-digit growth suggests demand for everyday products is still healthy, even as spending on discretionary goods slows.
The board declared an interim dividend of ₹24 a share, with a record date of 2 November and payment from 19 November. Excluding one-time items, profit grew 5.5%.
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