Equirus Securities

P&G Hygiene (Long)

CMP: ₹7,902.20

Target: ₹8,965

We recently conducted channel checks to understand the demand scenario for sanitary napkins and how it could impact Whisper (Procter & Garmble Hygiene & Healthcare brand). The opinion is that while there are near-term growth challenges in sanitary napkin category given low rural demand, long-term potential still remains intact.

Our checks reaffirmed that PGHH (and all P&G companies likewise) are continuing to focus on profit growth in India. Growth in sanitary napkins over the last 9-12 months has slowed down a bit due to sluggish rural growth which has been witnessed across the board for other FMCG companies. Post the ban of Vicks Action 500, offtake for the same has been impacted and growth in overall Vicks portfolio is a bit sluggish at this point in time.

We mainly adjust revenue estimates due to IND-AS and reduce EPS estimates due to lower other income. We maintain ‘Long’ rating on the stock with revised DCF based June 2018 target price ₹8,965.