P&G Hygiene and Healthcare (PGHH) recorded stagnant growth in 2QFY24 (ending in June), falling short of our high single-digit growth expectations. However, PAT increased 10% YoY propelled by a soft RM basket and a favorable product price mix. GM expanded 300bp YoY to 60%. Despite flat revenue growth, ad spending rose 14% YoY (11.2% of sales vs. 9.7% YoY). GM limited the EBITDA margin expansion to 180bp YoY at 27% (best margin during the last 8-9 quarters).
With a portfolio of essentials and healthcare, the company remained focused on product innovation-led customer acquisition. Penetration play will continue, but at a steady pace, despite the high scope of user addition. The stock trades at rich valuations of 63x and 55x P/E of FY25E and FY26E. We do not see any medium-term trigger. Reiterate Neutral.
With a portfolio of essentials and healthcare, the company remained focused on product innovation-led customer acquisition. Penetration play will continue, but at a steady pace, despite the high scope of user addition. However, the stock trades at expensive valuations of 63x and 55x P/E of FY25E and FY26E. We do not see any medium-term trigger. Our TP of INR16,000 is based on 55xDec’25E EPS; reiterate Neutral
