Motilal Oswal recommended a neutral rating on Procter & Gamble Hygiene and Health Care with a target price of Rs 15,180 in its research report dated January 31, 2023. PGHH reported an in-line performance up to the gross profit level in its 2QFY23 results (June year-end). However, the company beat our EBITDA, PBT/PAT estimates by 15–17%, as ad spends were significantly lower than our expectations at 9.7% of sales (after jumping to 14.9% of sales in 1QFY23). While we remain positive on the long-term growth potential of the sanitary napkin and healthcare businesses, the uncertain pace of recovery and challenging valuations of 53xFY24E EPS/~45xFY25E EPS lead us to maintain our Neutral rating.
Outlook
Nevertheless, the uncertain pace of sales and earnings recovery and expensive valuations of 53xFY24E EPS/~45xFY25E EPS lead us to maintain our Neutral rating. We value the stock at 50x Mar’25E EPS, arriving at a TP of INR15,180.
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