Gillette India Q1 Results Review - Adjusted Operating Performance Largely Inline: Yes Securities

Yes Securities Report

Gillette India Ltd.'s September- 23 quarters revenue was in-line with our estimate. Grooming business (79% of September- 23 revenues) crossed the Rs 5 billion quarter revenue mark for the first time ever, growing by 7.8% YoY (~9% on a five-year compound annual growth rate).

Reported margins for the quarter was supported by premiumisation and deliberate productivity interventions.

This was partially offset by a one-time expense. Excluding one-time impact, profit for the quarter was ahead of our estimate. There was also a sharp increase in advertising and sales promotion expenses for the quarter (140 basis points higher than our estimate), which suppressed the overall operating performance.

In its recent analyst meet, management mentioned that Gillette’s market share gain was faster in last 18 months and now stands at highest ever level of more than 60%.

With aggressive spending, we believe Gillette’s market share should further improve or atleast be maintained in a competitive macro-economic environment.

While the volatility in quarterly margin delivery continues, management in its recent analyst has clearly called out its aim to grow bottom-line faster than topline even while near-term cost pressure stays.

We continue to maintain our 'Add' rating with a revised target price of Rs 6,850, as we roll-forward to September-25.

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