'Buy' This Company Stock For +22% Return In 1 Year, Recommended By Motilal Oswal

Brokerage firm Motilal Oswal has picked P&G Hygiene and Healthcare (PGHH) for investors and recommended this company stock to buy.

Target price

According to Motilal Oswal, with the Current Market Price (CMP) at Rs. 14,302, the target price (TP) of this stock is Rs. Rs. 17,450, hence giving +22% return in 1 year. The firm said, "As the industry faces commodity inflation, PGHH has doubled down on its focus on driving productivity and innovation to drive a balanced growth in sales and profit." According to the brokerage firm, the company's "EBITDA margin, at 28.5%, was well ahead of our expectation of 23.9%, leading to an EBITDA/PAT beat v/s our expectations. Its medium-term top-line and earnings growth prospects remain the best of the breed. We maintain our Buy rating on the stock."

Company performance

P&G Hygiene and Healthcare's sales growth of ~5% has been lower than the brokerage firm's expectation, albeit on a base of 18.5% growth. In Q1FY22, the company's sales increased by 4.8% YoY to Rs. 10.6b (est. Rs. 11.6b). On a 2-year CAGR basis, sales/EBITDA/PAT have increased by 11.4%/28.6%/26.3%. Motilal Oswal said, "Highlights from the management commentary, Both the Feminine Care and Health Care businesses grew ahead of their categories in 2QFY22."

About the company

P&G Hygiene and Healthcare (PGHH) is one of the most popular companies in the country, with multiple leading brands in the hygiene, healthcare, and fabric care sectors. Pampers, Ariel, Tide, Whisper, Gillette, Oral B, Head & Shoulders, and Pantene are some of their most popular brands. Lately, the Healthcare segment has seen a growth of ~24% in FY21, partly aided by the pandemic, leading to strong sales growth for all Healthcare products.

Disclaimer

The above stock is picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.