P&G Q3 ReviewTopline Below Our Expectations; Increase In Ad Spends Augurs Well: Motilal Oswal

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Procter and Gamble Hygiene and HealthCare Ltd.’s Q3 FY21 sales growth, while healthy at 15.8% YoY, was lower than our expectations, considering:

  1. the strong momentum in recent quarters; and
  2. a favorable base, with a 6.2% sales decline in Q3 FY20 (June year-ending company).

There was a steep increase of 73% YoY in advertising spends, translating to ad spends coming in at 17.1% of sales in Q3 FY21, much higher than the usual quarterly levels of 9-12% of sales.

With gross margin actually above expectations (up 20 basis point YoY versus our expectation of a 160bp YoY decline), high ad spends was the key reason for the miss on our Ebitda margin forecasts.

Click on the attachment to read the full report:

Motilal Oswal P&G Q3CY21 Result Update.pdf


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