IGI Logo

Focusing on sustainable growth; rich valuation limits upside

We attended PGHH’s analyst meet and following are the key takeaways.

* PGHH’s strategic pillars that drive growth in the Personal and Healthcare categories are intact. The company holds a dominant ~50% market share in both the Feminine Hygiene and Healthcare categories. It continues to expand its portfolio through product innovation (like Vicks VapoRub Steam Pods, Vicks Cough Syrup, and Whisper Super Absorbent Period Panty). Rapid advancements in digital initiatives have enhanced PGHH's distribution network, leading to improved product assortment across retail outlets.

* Management highlighted that rural recovery is picking up, while urban consumption is expected to revive more gradually—in line with trends observed across the FMCG sector. PGHH is focused on creating superior propositions across product, packaging, brand communication, retail execution, and overall customer value. The company has integrated its productivity strategy across the value chain—covering materials, manufacturing, overhead, ad spends, and working capital—resulting in savings of INR0.93b in FY25 (~3% of sales) on account of improved efficiency and operational productivity. These savings are being reinvested into the business to drive future growth, innovation, and market expansion.

* PGHH delivered a 7% revenue CAGR during FY19-24, and we estimate a 7% CAGR during FY24-27. EBITDA margin has also seen consistent improvement, with 250bp expansion to ~23.5% during FY19-24. We model 24-25% EBITDA margin during FY24-27E. EBITDA posted a 10% CAGR during FY19-24, and we model a similar ~10% CAGR during FY24-27E. The stock trades at a rich valuation of 49x/45x FY26E/FY27E P/E. We reiterate a Neutral rating at a TP of INR15,000 (50x Mar’27E EPS).

Valuation and view

* There is no change in our estimates following 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), along with opportunities for market share gains supported by strategic initiatives, including the fortification of significant market advantages, and 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 focuses on customer acquisition through product innovation. Penetration play is expected to continue at a stable pace, despite the high scope of user additions. The stock trades at expensive valuations of 49x/45x FY26E/FY27E P/E. We do not see any medium-term trigger. We reiterate a Neutral rating at a TP of INR15,000 (50x Mar’27E EPS).

For More Research Reports : Click Here 

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412