* EQUITY

RESEARCH
DHAWAL SHAH
20182040
 * MARKET SCENARIO

DATA (as on 26 Sep,2019)

CALL HOLD
CMP 11508.35
TARGET PRICE 11600
MARKET CAP (in. CR) 37365.95
P/E RATIO 89.13
ROE 56.85%
FACE VALUE (RS) 10
BOOK VALUE (RS) 280.05
BSE CODE 500459
NSE PGHH
 COMPANY OVERVIEW

Procter & Gamble Hygiene and Health Care Limited

* Type: Common stock
* Stocks: NSE:PGHH.NS
* Sector: Consumer Goods
* Industry group: Personal Goods
* Industry: Household & Personal Products

* Business summary: 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.
* PERFORMANCE LAST YEAR
* BRAND EQUITY * LOSS DUE TO CLOSURE OF
* ECONOMIES OF SCALE BRANDS

* EXCELLENT R&D * ORGANISATION STRUCTURE

CAUSS SLOW DECISION
* MULTI NATIONAL & MULTI MAKING
PRODUCT LINE PRESENCE
* REGULAT CHANGE IS NEEDED
* DISTRIBUTION CHANNEL
* MARKETING STRATEGY

*
* RURAL MARKETS * INTENSE COMPETITION
* INCREASE ORGANIC * PRIVATE LABELS
GROWTH * INCREASED
* MERGERS & ACQUISITIONS LOCAL/UNBRANDED
* INCREASED PURCHASING COMPETITION
POWER
* OVERSEAS GROWTH
Competitive rivalry or competition (strong force)
• Large number of firms (strong force)
• High variety of firms (strong force)
• Low switching cost (strong force)

Bargaining power of buyers or customers (weak force)

• Low switching cost (strong force)
• Low availability of substitutes (weal force)
• High overall market demand (weak force)

Bargaining power of suppliers (weak force)

• Moderate degree of forward integration (moderate force)
• High overall level of supply (weak force)
• High population of suppliers (weak force)

Threat of substitutes or substitution (weak force)

• Low switching cost (strong force)
• Low availability of substitutes (weak force)
• Low variety of substitutes (weak force)

Threat of new entrants or new entry (moderate force)

• Low switching cost (strong force)
• Moderate capital cost (moderate force)
• Moderate economies of scale (moderate force)
 * PIOTROSKI F-SCORE

DATA 2019 201 201 • According to the

8 7 ratings, F-score of
INCOME FROM OPERATIONS 1 1 1 the company is:
• 2019- 6
CASH FLOW 1 1 1 • 2018- 6
RETURN ON ASSETS 1 0 1 • 2017- 4
And the average of 3
CHANGE IN RETURN ON ASSETS 0 0 0
years is 5.3 which is
DEBT RATIO 0 0 0 neutral.
CURRENT RATIO 1 1 0 • The company is in
neutral stage which
BUY BACK RATIO 0 1 0
means its financial
GROSS MARGIN 1 1 1 position is stable.
ASSET TURN OVER 1 1 0

F-SCORE 6 6 4
 * PROFITABILITY RATIO

PARTICULARS 2019 2018 2017 • The ratios are not good as

compared to previous years.
PBDIT Margin (%) 22.48 26.55 31.97 • Net profit margin ratio has
declined as well as the return on
PBIT Margin (%) 20.79 23.91 29.39 equity has also shown a fall.
• The company is unable to
PBT Margin (%) 20.61 23.69 28.95
control costs.
Net Profit Margin (%) 14.22 15.25 18.64 • Cost of production has
increased than sales.
Return on Net worth / Equity
46.1 46.5 82.24
• Operating efficiency needs to be
(%) worked upon.

Return on Capital Employed (%) 62.88 68.72 118.06

Return on Assets (%) 25.68 26.28 37.3

Asset Turnover Ratio (%) 180.55 172.25 200.01

* BALANCE SHEET WITH REASONABLE GROWTH POTENTIAL

PARTICULARS 2019 2018 2017

SHARE CAPITAL 32 32 32 • Inspite of not good

EQUITY CAPITAL 32.46 32.46 32.46 profitability ratio the
company is getting ready
RESERVES 877 773 494 to thrive in the market
BORROWINGS 0 0 0 when the going gets good
again.
OTHER LIABILITIES 723 633 642
• Company is increasing
TOTAL LIABILITIES 1,632 1,439 1,168 internal funding by way of
retained earnings.
FIXED ASSETS 234 250 286
• Current ratio
CWIP 15 21 41 2019- 1.66
2018- 1.54
INVESTMENTS 0 0 0
• Quick ratio
OTHER ASSETS 1,383 1,167 842 2019- 1.35
TOTAL ASSETS 1,632 1,439 1,168
2018- 1.33
 * CONCLUSION

* Margins have remained volatile over the past few years, but sales growth has revived
significantly due to distribution expansion and sharp ad spends in the preceding quarters. While
the structural growth opportunity in the feminine hygiene segment.

* Corporate action board approves dividend. The company has recommended a final dividend of
Rs. 48 per equity share.

* With recent moves on sharp increase in distribution, increased advertisements and taking price
cuts were required, the company is clearly back on growth path. However P&G remains a long
term pick.

* The FMCG sector is showing a great growth potential. Fast moving consumer goods (FMCG)
are the 4th largest sector in the Indian economy. There are three main segments in the sector –
food and beverages which accounts for 19 per cent of the sector, healthcare which accounts for
31 per cent and household and personal care which accounts for the remaining 50 per cent.
* The FMCG sector has grown from US$ 31.6 billion in 2011 to US$ 52.75 billion in 2017-18. The
sector is further expected to grow at a Compound Annual Growth Rate (CAGR) of 27.86 per cent to
reach US$ 103.7 billion by 2020.

* FMCG Companies are looking to invest in energy efficient plants to benefit the society and lower
costs in the long term.

* Tata’s are also planning to expand its home and personal care products in FMCG sector.

* Growing awareness, easier access, and changing lifestyles are the key growth drivers for the consumer
market

* These initiatives are expected to increase the disposable income in the hands of the common people,
especially in the rural area, which will be beneficial for the sector.

* Expected growth in FMCG sector will lead to growth of the P&G company which also
has a growth potential in the near future.
THANKYOU