4QFY16 sales came in flat YoY at INR5.58b (est. of INR6.19b). EBITDA margin, however, grew 70bp YoY to 28.4% – we had expected a 470bp YoY decline given the high base. EBITDA was up 2.7% YoY to INR1.59b and PAT by 2.2% YoY to INR1.09b, exceeding our expectation by 11% and 9%, respectively. Healthcare sales disappoint again: In our quarterly preview, we had pointed out that healthcare had a good quarter in 4QFY15 (June year-end). We had expected delayed monsoon in 4QFY16 to slow down healthcare sales growth, but did not expect a sharp decline. While the press release clarified that feminine hygiene sales grew in strong double-digits for the full year, this segment is likely to have reported single-digit sales growth in 4QFY16.
Valuation and view: EPS forecasts for FY18 have been marginally raised by 1.4%. PGHH’s current P/E multiples of 39xFY18 are in line with other consumer MNCs, despite its distinct advantages over peers, namely: (1) it is in a much faster growing category and (2) there are high barriers to entry in its key feminine hygiene segment. Its ongoing distribution expansion and unmatched category development efforts should offer further support to growth. We maintain 45x target multiple with a target price of INR7, 809 (INR7,690 earlier)