P&G Q3 Review: Miss On All Fronts; Quarterly Inconsistency Continues, Says Motilal Oswal— Maintains 'Neutral'

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Motilal Oswal Report

P&G Hygiene and Healthcare Ltd.’s Q3 FY25 (FY ending June) performance missed our estimates on all fronts. We have noted such performance volatility on a quarterly basis in the past. Revenue was down 1% YoY at Rs 9.9 billion (vs 14%/10% growth in Q3 FY24/Q2 FY25).

Gross margin contracted 610 bp YoY/460 bp QoQ to 60.2% (estimate 65%). Gross profit was down by 10% YoY. Ad spends were down 10% YoY (12.2% of sales). Ebitda declined 19% YoY to Rs 2.1 billion (estimate: Rs 2.7 billion). Ebitda margin contracted 450 bp YoY and 860 bp QoQ to 21.1% (estimate: 24.7%).

P&G delivered a 7% revenue CAGR during FY19-24, and we estimate a 7% CAGR during FY24-27E. The company is less predictable on a quarterly basis, but its annual performance is still quite steady. Ebitda margin has also seen consistent improvement, with 250 bp expansion during FY19-24 to ~23.5%. We model 24%-25% Ebitda margin during FY24-27E. Ebitda saw a 10% CAGR during FY19-24, and we model a similar ~10% CAGR during FY24-27E.

The stock trades at a rich valuation of 52x/48x FY26E/FY27E P/E. We reiterate Neutral rating at a target price of Rs 15,000 (50 times Mar’27E EPS).

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