MOSL: P&G HYGIENE AND HEALTHCARE (Neutral)-Sales momentum sustains-material cut in EPS forecasts
P&G Hygiene and Healthcare: Sales momentum sustains; material cut in EPS forecasts on major margin miss
(PG IN, Mkt Cap USD4.5b, CMP INR9990, TP INR9800, 2% Downside, Neutral)
- Net sales grew strongly for the second straight quarter at 16.2% YoY to INR8.2b (our estimate: INR8.3b) in 2QFY19 (FY ending June). However, EBITDA declined by 9% YoY to INR1.9b (our estimate: INR2.4b) and adj. PAT was down by 5.4% YoY to INR1.2b (our estimate: INR1.5b).
- Gross margin shrank 460bp YoY to 55.5%, which can be attributed to a combination of factors, such as (a) high commodity inflation levels, as also witnessed by peers so far in the Dec'18 results, (b) 10% price cuts in Whisper Choice Ultra and (c) absence of input tax credit under GST for sanitary napkins. EBITDA margin shrank 650bp YoY to 23.4%, led by higher ad spends (+140bp YoY - fourth straight quarter of sharp increase YoY), employee cost (+40bp YoY) and other expenses (+10bp YoY).
- 1HFY19 performance: Net sales were up by 18.2% YoY to INR16.1b, EBITDA rose 0.8% YoY to INR4b and PAT grew 5.0% YoY to INR2.6b.
- Negative net working capital increased by ~60% both YoY and over March, as the increase in creditor days offset the rise in other components.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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