Motilal Oswal's research report on Procter and Gamble Hygiene and Healthcare
P&G Hygiene and Healthcare (PGHH) delivered sales growth of 10% in 4QFY24 (FY ending June), in line with our expectation. This growth was led by product-price mix, premiumization, and growth in the feminine hygiene category. The last four/five-year CAGR was at 10%/8%. Gross margin expanded 160bp YoY but contracted sharply by 710bp QoQ to 59.2% (est. 65.3%). Ad spending jumped 187% YoY (16.5% of sales). EBITDA fell 38% YoY to INR1.3b (est. INR2.7b). EBITDA margin contracted sharply by 1,080bp YoY and 1,160bp QoQ to 14.1%, which stood at a 12-quarter low. With a portfolio of essentials and healthcare, the company remains focused on product innovation-led customer acquisition. Penetration play would continue, but at a steady pace, despite the high scope of user additions. The stock trades at an expensive valuation of 62x/54x FY25E/ FY26E P/E. We reiterate Neutral rating on the stock.
Outlook
The stock trades at expensive valuations of 62x/54x FY25E/FY26E P/E. We do not see any medium-term trigger. Reiterate Neutral with a TP of INR17,000 (55x Jun’26E EPS).
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