P&G Health - Company Update - ICICI Securities

Q4FY20 (year ending June) revenues declined 13.9% YoY to Rs. 201 crore due to temporary disruption of operations initially from the second fortnight of March amid Covid. EBITDA margins expanded 305 bps YoY to 26.4% due to better gross margins and lower other expenditure. EBITDA de-grew 2.7% YoY to Rs. 53 crore. Net profit grew 10.8% YoY to Rs. 49 crore. Delta vis-a-vis EBITDA was due to lower tax rate (12.3% vs. 28.3% in Q4FY19).

Valuation & Outlook

While Q4FY20 revenues were impacted by Covid related challenges, PGHL has posted one of the best margin performances in the recent past leading to resilient profitability. Besides possessing MNC pharma traits like strong brand stickiness, growth, earnings visibility, consistency (despite quarterly fluctuations) in performances, strong b/s etc, the key differentiator for PGHL is that its core category is VMS, which, as a therapeutic category, is likely to be rediscovered amid the current pandemic. PGHL combines the best of P&G and legacy Merck's consumer health capabilities and cultures. We upgrade from HOLD to BUY with a TP of Rs. 6110 (44x FY22E EPS of Rs. 138.8).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_PGHealth_CoUpdate_Sep20.pdf

Shares of P&G Health Ltd (formerly MERCK LTD.) was last trading in BSE at Rs.5385 as compared to the previous close of Rs. 5423.35. The total number of shares traded during the day was 2329 in over 874 trades.

The stock hit an intraday high of Rs. 5532 and intraday low of 5310. The net turnover during the day was Rs. 12669081.

Source : Equity Bulls

Keywords