P&G Q2 Results Review - Topline Momentum Sustains, Margins Surprise: Nirmal Bang

Nirmal Bang Report

While Procter and Gamble Hygiene and Health Care Ltd.'s sales growth was in line, Ebitda and profit after tax were ~10%/13% ahead of expectations led by gross margin beat (likely because of lower pulp costs) and healthy Ebitda margins despite healthy ad spends to sales ratio of 13.5% for the quarter, the second highest in the last nine quarters.

Four year sales compound annual growth rate at 7.5% was similar to Q4 FY23 levels and with gradual reduction of consumer price index inflation led impact on feminine hygiene sales (conversion from cloth to sanitary napkins gets affected during periods of high inflation) and recovery in the healthcare segment off earlier high base momentum is likely to be stronger in the second half in our view

While we remain structurally positive on topline growth momentum of the stock, fair valuations of ~57 times FY25 earning per share leads us to maintain our 'Accumulate' rating.

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