Colgate Q2 FY27 revenue grows double-digit, margin slips

reported its Q2 FY27 performance, showing accelerating top-line growth driven by a premium product mix and volume recovery. What happened: Colgate posted double-digit revenue growth for the second consecutive quarter. Toothpaste volume growth sustained a high-single-digit trajectory, supported by new product launches and a strategic push into premium offerings under managing director and CEO Manish Anandani. Gross margins expanded due to moderating raw material costs. However, EBITDA margins contracted because the company ramped up advertising and promotional spend by 368 basis points year-on-year, bringing ad costs to 18.6 percent of ***** it matters: The aggressive marketing spend is a deliberate defensive strategy. Colgate faces intensifying competition from D2C brands, rising incumbents, and shifting consumer preferences, which have challenged its traditional pricing power. By plowing savings from gross margins directly into brand building and premium positioning, the company is attempting to safeguard and expand its market share rather than maximize short-term ***** view: While the top-line recovery is encouraging, the market is currently penalizing the bottom-line compression. The stock has de-rated significantly to 30x FY28 estimated P/E from its 10-year average of over 40x due to margin erosion and subsequent downward earnings revisions. The headline focuses on growth, but misses the reality that heavy marketing dependency could become a structural drag on margins if competitive pressures persist without yielding permanent market share gains. What to watch next: Watch whether sustained double-digit growth can absorb elevated ad spending over the next two quarters, and look for signs of margin stabilization. View: Equal-weight. A valuation re-rating hinges on proof that heavy advertising drives durable growth rather than squeezed operational returns.