Colgate-Palmolive

Sep 9, 2025

The has turned the spotlight back on India's consumption story. The brokerage house believes this could be the much-needed trigger for India's consumption revival, with several large categories now shifting from 18% GST to 5%. According to the brokerage house, the new tax slabs could unlock a sharp rise in demand just ahead of the festive season, making staples and the biggest beneficiaries. As per the brokerage report, “In continuation of PM Modi's announcement on on Independence Day, the 56th GST meet concluded with most consumer categories receiving a GST rate cut.” The new structure will be effective from September 22, 2025, just ahead of the festive season. Motilal Oswal's top pick: Colgate-Palmolive upgraded The brokerage house has made a decisive call on , upgrading it to “Buy” from Neutral. The stock has corrected nearly 35% over the past year. This make the valuations more attractive at 46x and 41x P/E for FY26 and FY27, respectively. The report added, “Domestic sales mix falling under the impacted categories results in ~12% effective GST cut at the company level.” With GST-driven tailwinds and a focus on oral care expansion, Motilal Oswal expects Colgate to see a sharp recovery in both volume and revenue growth. HUL, GCPL, Marico also in focus While takes the spotlight, Motilal Oswal continues to prefer large FMCG names like and . These companies, with strong penetration in essential categories, are expected to pass on benefits through lower prices or increased grammage in packs. “We expect most companies to pass on the benefits of the GST rate reduction to consumers,” the brokerage noted. This, in turn, could fuel higher demand across both urban and rural markets. Consumption revival on the horizon The brokerage highlighted that weak trends over the past 2–3 years driven by commodity inflation, higher interest rates, and post-Covid disruptions are now easing. “While the government initially focused on infrastructure and manufacturing set-up, consumption revival has now become among the top priorities,” Motilal Oswal report adedd. With inflation cooling, a favourable monsoon forecast, and supportive policy measures, the report expects household spending to bounce back over the next year GST 2.0: Why consumption revival is back in play The brokerage drew parallels with the first GST rollout in 2017, when demand picked up strongly post-implementation. “Following the implementation (July 2017), there was a significant pickup in volume and revenue growth in the subsequent quarters. FY18 and FY19 witnessed growth acceleration of 500–1,000bp compared to FY17 across companies,” the report highlighted. This time too, while some near-term disruption in trade is possible in the September quarter, believes the structural changes are long-term positives. “With improving macros, easing inflation, and a favorable monsoon outlook, the consumption sector is well poised for recovery over the next 12-15 months,” added the brokerage report. Other notable beneficiaries: Emami, Nestle, Dabur Apart from the big names, mid-sized FMCG companies will also benefit from GST rationalisation. , with 90% domestic sales, is expected to see approx. 9% effective GST cut, while Nestle India stands to gain from around 8% reduction at the company level. , and are also well-placed, though their overall exposure is slightly lower. The brokerage added, “While the immediate stock reaction was muted due to this run-up, we believe the structural benefits of lower taxation particularly in essential food and personal care categories will support healthy volume-led growth over the medium term.”