Margins Expand For Procter & Gamble’s Indian Subsidiaries On Curtailed Costs

Indian subsidiaries of Procter & Gamble Co. traded higher on Monday after posting steady revenue growth and considerable expansion in margins on account of curtailed expenditure.

Personal and beauty care manufacturer Procter & Gamble Hygiene and Healthcare Ltd. saw revenues grow 7 percent year-on-year to Rs 624 crore in the January-March quarter, and a significant 140-basis-point expansion in operating margins to 28.1 percent.

Expansion in margins was due to curtailed cost of raw materials and advertising spends when compared to growth in sales.

Net profit for the company known for its brands, such as Vicks and Old Spice, may have grown only 2.7 percent to Rs 99.6 crore but this was partially due to tax expenses jumping to Rs 61.8 crore from 46.8 crore from a year ago.

Broking firm Motilal Oswal Securties maintains a ‘buy' rating on the stock with a price target of Rs 8,760.

Another one of P&G's subsidiaries, Gillette India, saw a more robust 16 percent growth in total income from operations to Rs 543 crore.

A considerable fall in costs of raw material consumed and purchases along with a reduction in advertising spends led to margins expanding by 640 basis point to 30.6 percent from a year ago. Consequently, net profit grew nearly 54 percent to Rs 106 crore from 70 crore for the quarter from a year-ago.

Shares of Procter & Gamble Hygiene and Healthcare closed 5.6 percent higher at Rs 7,822.9, while those of Gillette India ended 9 percent higher at Rs 4,814.5.