MOSL: P&G HYGIENE AND HEALTHCARE (Neutral)-Strong comeback after three muted years
(PG IN, Mkt Cap USD5b, CMP INR10998, TP INR11441, 4% Upside, Neutral)
Key takeaways from P&G Hygiene and Healthcare’s (PGHH) FY19 annual report:
** PGHH has maintained its focus on strengthening the brand fundamentals through strategic moves such as innovation, product launches, distribution expansion, and superior communication/execution. Sales increased 20% YoY in FY19, primarily led by the feminine hygiene segment (+24.4% YoY; 70% of sales). Healthcare segment too exhibited a healthy performance (+11.2% YoY), driven by 14% YoY growth in Vicks VapoRub.
** Under the Whisper brand, PGHH launched 'Whisper Choice Aloe Vera' to tap into the rising fervor for naturals among the Indian consumers. The product is offered at the lowest price point, indicating PGHH's changed approach to play not only at the top but also the bottom end of the consumption pyramid.
** Whisper school program created awareness among five million girls across 40,000 schools about the importance of menstrual hygiene in FY19. Notably, this program has reached 25 million girls since 1995.
** In Healthcare, the higher penetration for Rubs, new launches (premium lozenge Vicks 3-in-1), distribution expansion and strong advertising helped the segment to grow in double digits in FY19.
** Branding aggression continued for the second year in FY19, with ad spends as a percentage of sales staying flat at 10.6% in FY19 (up from 8.8% in FY17). Interestingly, ad spends were even higher at 12.3% (+180bp YoY) in 1QFY20.
** There has been no absolute increase in lending to fellow subsidiaries and these contribute only 14% of cash & cash equivalents - the lowest-ever level. Interest rate on these loans stood at 7.8% in FY19.
Procter & Gamble Hygiene and Health Care Limited is an India-based company, which is engaged in the manufacturing and selling of branded packaged fast moving consumer goods in the femcare and healthcare businesses. The Company offers ayurvedic products and sanitary napkins. The Company is involved in manufacturing, trading and marketing of health and hygiene products. The Company's brands include Ambi Pur, Ariel, Duracell, Gillette, Head & Shoulders, Olay, Oral-B, Pampers, Pantene, Tide, Vicks, Wella and Whisper. The Company's products include ointments and creams, cough drops, tablets, personal products and toilet preparations, among others. The Company's products are sold through retail operations, including mass merchandisers, grocery stores, membership club stores, drug stores, department stores and high frequency stores. The Company has its manufacturing locations at Goa and Baddi in Himachal Pradesh, apart from third-party manufacturing locations spread across India.
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