Neutral Procter and Gamble Hygiene and Health care; target of Rs16,940: Motilal Oswal

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

PGHH reported high single-digit sales growth in 1QFY24 (ending in June), surpassing our initial double-digit growth expectations. PAT up 36% YoY driven by an increase in volume growth, a favorable product price-mix, and enhanced productivity. GP margin has been expanded 230bps, while operating margin expanded by 450 bps owing to the benefit of operating leverage. Ad-spends mounted sequentially to 13.5% of sales from 6.3% (albeit, declined 140bp YoY) during the quarter.

Outlook

The company continues to grow with strong product portfolio of sanitary napkins and healthcare business, superior consumer communications and stream of product innovations. With the challenging valuations of ~64.9xFY24E EPS/~54.4xFY25E EPS led us to maintain our Neutral rating on the stock.