Motilal Oswal Retains Neutral Stance on P&G: Q1 Results Analysis and Target Price
Procter and Gamble Hygiene and Health Care Ltd. (P&G) has posted a flat year-over-year (YoY) revenue growth of Rs 9.4 billion in Q1 FY26, missing estimates. This weak revenue growth is not an isolated incident, as the company has witnessed sluggish growth over the last four quarters.
Q1 Results: A Miss
P&G’s Q1 FY26 revenue growth of Rs 9.4 billion was a miss, with the company failing to meet expectations. The revenue growth was flat YoY, compared to ~10% growth in the base quarter. This is not the first time the company has witnessed weak revenue growth, as the last four quarters have been lackluster.
Motilal Oswal’s Neutral Stance
Motilal Oswal has retained its neutral stance on P&G post Q1 results, citing two key factors that make the company an attractive long-term core holding. Firstly, the high growth potential in the feminine hygiene segment, which accounts for 65-68% of FY24 sales, coupled with the potential for market share gains, makes P&G an attractive bet. This is aided by strategic initiatives, including the fortification of significant market advantages.
Secondly, the potential to sustain high operating margins from the long-term premiumization trend in the feminine hygiene segment is another factor that makes P&G an attractive long-term core holding. The company’s focus on product innovation-led customer acquisition, with a portfolio of essentials and healthcare, is expected to continue, albeit at a stable pace, despite the high scope of user additions.
Valuations and Target Price
The stock trades at rich valuations of 52x/47x FY26E/FY27E P/E, which is a concern. Further, Motilal Oswal does not see any medium-term trigger for the stock. As a result, the brokerage firm has reiterated its neutral stance on P&G, with a target price of Rs 15,000, based on 50x Jun’27E EPS.
Investment Advice
While Motilal Oswal’s neutral stance on P&G may not be a strong buy signal, it is essential to consider the company’s long-term growth potential and attractive valuations. Investors should consult with a financial expert before making any investment decisions, as the views expressed in this report are that of the author entity and do not represent the views of NDTV Profit.
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Conclusion
In conclusion, Motilal Oswal’s neutral stance on P&G post Q1 results is a reminder that investors should be cautious and consider the company’s long-term growth potential and valuations before making any investment decisions. While the stock may not be a strong buy at current levels, its attractive long-term core holding potential and potential for market share gains make it an interesting bet for investors with a long-term perspective.
