Neutral Procter and Gamble Hygiene and Health Care; target of Rs 16,940: Motilal Oswal

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

PGHH reported sales growth of 12.6% in 4QFY23 (June year-end), higher than our exception, driven by premiumization and productivity interventions. The company beat our EBITDA/PBT/PAT estimates, as adspends were significantly lower than our expectation at 6.3% of sales (after jumping to 12.1% of sales in 3QFY23). While we remain positive on the long-term growth potential of the sanitary napkin and healthcare business, the uncertain pace of recovery and challenging valuations of ~65xFY24E EPS/~53xFY25E EPS lead us to maintain our Neutral rating.

Outlook

Nevertheless, the uncertain pace of sales and earnings recovery and expensive valuations of ~65xFY24E EPS/~53xFY25E EPS lead us to maintain our Neutral rating. We value the stock at 55x Mar’25E EPS, arriving at a TP of INR16,940.