P&G Hygiene And Healthcare Q4 Results Review - Inline Revenue; Cost Surge Shrinks Margin: Motilal Oswal

Motilal Oswal Report

Procter and Gamble Hygiene and Healthcare Ltd. delivered sales growth of 10% in Q4 FY24 (FY ending June), in line with our expectation. This growth was led by product-price mix, premiumisation, and growth in the feminine hygiene category. The last four/five-year CAGR was at 10%/8%.

Gross margin expanded 160 basis points YoY but contracted sharply by 710 bp QoQ to 59.2% (estimate: 65.3%). Ad spending jumped 187% YoY (16.5% of sales). Ebitda fell 38% YoY to Rs 1.3 billion (estimate: Rs 2.7 billion).

Ebitda margin contracted sharply by 1,080 bp YoY and 1,160 bp 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 62 times/54 times FY25E/ FY26E P/E. We reiterate Neutral rating on the stock.

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