Neutral Procter and Gamble Hygiene and Health Care; target of Rs 15,000: Motilal Oswal

Motilal Oswal's research report on Procter and Gamble Hygiene and Health Care

PGHH’s strategic pillars that drive growth in the Personal and Healthcare categories are intact. The company holds a dominant ~50% market share in both the Feminine Hygiene and Healthcare categories. It continues to expand its portfolio through product innovation (like Vicks VapoRub Steam Pods, Vicks Cough Syrup, and Whisper Super Absorbent Period Panty). Rapid advancements in digital initiatives have enhanced PGHH's distribution network, leading to improved product assortment across retail outlets. Management highlighted that rural recovery is picking up, while urban consumption is expected to revive more gradually—in line with trends observed across the FMCG sector. PGHH is focused on creating superior propositions across product, packaging, brand communication, retail execution, and overall customer value. The company has integrated its productivity strategy across the value chain—covering materials, manufacturing, overhead, ad spends, and working capital—resulting in savings of INR0.93b in FY25 (~3% of sales) on account of improved efficiency and operational productivity. These savings are being reinvested into the business to drive future growth, innovation, and market expansion.

Outlook

We model 24-25% EBITDA margin during FY24-27E. EBITDA posted a 10% CAGR during FY19-24, and we model a similar ~10% CAGR during FY24-27E. The stock trades at a rich valuation of 49x/45x FY26E/FY27E P/E. We reiterate a Neutral rating at a TP of INR15,000 (50x Mar’27E EPS).

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