Gillette India - India Business Is Following Global Footprint: Nirmal Bang
Valuation is inexpensive at ~41 times FY25E earnings per share.
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Nirmal Bang Report
Return on capital employed was always healthy for Gillette India Ltd. and dividend payout has also been increasing in recent years, but growth in topline as well as earnings, which was lacking, also seems to have revived over the past years.
Valuation is inexpensive at ~41 times FY25E earnings per share (despite nearly 30% run-up in the stock since our detailed report in June 2023), especially if double-digit earnings growth of the past two years can sustain.
Maintain 'Buy' with a target price of Rs 6,775 (45 times Sept’25E earnings per share).
As we delved into the global grooming business strategy of Procter and Gamble Hygiene and Healthcare Ltd. (8% of P&G sales and ~10% of its earnings), we discovered that there is significant congruence between strategies that have made the India business successful in the last two years as highlighted in our detailed report in June 2023 and the turnaround in some parts of the global grooming business, which is also doing well in recent years.
These common factors include revitalising the female shaving products portfolio, change in emphasis to becoming a grooming company rather than being a wet shaving products company earlier, increasing market share in appliances and the launch of a range of products for customers with facial hair.
With the gradual introduction of the Braun range of products in India from February 2022 as part of the listed Gillette India, this fills an important gap in Gillette India’s erstwhile India portfolio. Healthy sales growth in the last two years has resulted in the Gillette India grooming sales now increasing in terms of salience of global grooming sales.
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