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Focus on sustainable growth; near-term demand challenges

* PGHH continues to maintain its leadership position with a dominant ~50% market share in both the Feminine Hygiene and Healthcare categories. The company remains focused on driving category development through innovation, brand investments, and consumer education. Recent launches such as Vicks Cough Syrup, Vicks ZzzQuil Natura Sleep Gummies, and Whisper Super Absorbent Period Panty have further strengthened its portfolio. Competitive intensity has increased in Feminine Hygiene with the entry of several regional and D2C players; however, PGHH views this as a catalyst for category expansion. Rapid advancements in digital initiatives have enhanced PGHH's distribution, improving the product assortment in its retail outlets.

* Management expects the operating environment to remain challenging as macro inflation is expected to keep consumers value-conscious. It has noted soft demand trends across both rural and urban markets. The company is focused on creating superior propositions across product, packaging, brand communication, retail execution, and customer value equation. PGHH was able to save INR0.86b in FY26 (~2% of sales) on account of improved efficiency and operational productivity. These savings are reinvested into the business to drive future growth, innovation, and market expansion.

* PGHH delivered a 6% revenue CAGR during FY19-26, and we estimate ~7% CAGR for FY26-28E. EBITDA margin has expanded from ~21% in FY19 to ~27% in FY26. We model a 27%-27.5% EBITDA margin for FY27 and FY28. EBITDA clocked a 10% CAGR during FY19-26, while we model ~7% CAGR for FY26-28E. The stock currently trades at 32x/30x FY27E/FY28E P/E. We reiterate a Neutral rating with a TP of INR10,000.

Valuatio and view

* We broadly maintain our estimates post the analyst meet.

* Two factors make PGHH an attractive long-term core holding:

1) Robust growth potential in the feminine hygiene segment (65-68% mix of FY24 sales) and the potential for market share gains, aided by strategic initiatives, including the fortification of significant market advantages

2)Potential for higher margin gains from the long-term trend of premiumization in the Feminine Hygiene segment.

* With a portfolio of essentials and healthcare, PGHH remains focused on product innovation-led customer acquisition. While penetration play will continue, it is expected to proceed at a stable pace despite the high scope of user additions. Further, we do not see any medium-term upside trigger.

* We model Revenue/EBITDA/PAT CAGR of 7%/7%/8% over FY26-28E. Given the volatility in margins, we find other consumer names relatively better than PGHH for the growth outlook at the valuation it offers. We reiterate Neutral with a revised TP of INR10,000 (based on 35x Mar’28E EPS)

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