ICICI Securities has reiterated its BUY recommendation on P&G Health Limited (formerly Merck Limited), citing sustained momentum from its transformed distribution strategy, strengthening performance across key vitamin and supplement brands, and continued expansion in profitability. The brokerage has assigned a 12-month target price of Rs 7,535, implying an upside potential of nearly 21% from the current market price of Rs 6,240. The company’s latest quarterly performance reflects the success of its revamped go-to-market model, stronger brand traction, and improving operational efficiency, positioning it as a compelling play on India's underpenetrated Vitamins, Minerals and Supplements (VMS) market.

ICICI Securities Reaffirms BUY Call on P&G Health

Target Price: Rs 7,535 | Upside Potential: 21%

ICICI Securities remains optimistic on P&G Health’s long-term growth trajectory and has maintained its BUY recommendation. The brokerage values the stock at 27x FY28 estimated earnings per share (EPS) of Rs 279.1, arriving at a target price of Rs 7,535 over the next 12 months.

The recommendation is underpinned by the company’s strengthened market execution, expanding margins, robust cash generation capabilities, and leadership position in the fast-growing VMS segment.

P&G Health’s VMS Franchise Continues to Deliver

P&G Health remains one of India's most established pharmaceutical and OTC healthcare companies, with a strong presence in the vitamins, minerals and supplements category. The company's portfolio includes several iconic brands such as:

Neurobion Forte
Polybion
Evion
Livogen
Nasivion
Seven Seas

The business derives approximately 67% of its revenue from the VMS segment, a category that analysts believe remains significantly underpenetrated in India despite rising consumer awareness around preventive healthcare and nutritional supplementation.

Q4FY26 Performance Highlights Strong Execution

The March quarter delivered one of the strongest performances in recent years.

Revenue Growth Accelerates

Revenue rose nearly 20% year-on-year to Rs 370 crore, driven primarily by healthy demand for:

Neurobion Forte
Livogen
Polybion

These gains more than compensated for weakness witnessed in Evion and Nasivion during the quarter.

Margins Expand Sharply

The most notable highlight was profitability.

EBITDA surged approximately 67% year-on-year to around Rs 136 crore, while EBITDA margin expanded by over 1,000 basis points to 36.6%.

Gross profit margins improved to 74.9%, reflecting:

Better product mix
Improved operational leverage
Enhanced distribution efficiencies

Net profit margins also remained healthy at approximately 25%, showcasing the strength of the company's business model.

The Distribution Transformation Is Beginning to Pay Off

One of the most important developments for P&G Health over the past two years has been the restructuring of its supply and distribution architecture.

The company has implemented a transformed Go-To-Market (GTM) model centered around a strengthened super-distributor network. According to ICICI Securities, the benefits of this strategy are now becoming visible in both revenue growth and profitability metrics.

In addition, management has demonstrated effective product lifecycle management through the launch of new variants such as:

Livogen Iron Gummies
Neurobion Nerve Pain Relief Cream

These extensions allow the company to leverage established brands while entering adjacent healthcare categories.

Power Brands Continue to Lead Growth

A key strength of P&G Health remains its concentrated portfolio of category-leading brands.

The company's top ten brands generated approximately Rs 1,119 crore in annual sales during FY26, accounting for nearly 80% of IQVIA-tracked revenues.

Among the standout performers:

Overall, the top-ten portfolio registered 12.3% growth in FY26, significantly ahead of its three-year CAGR of 6.7%, highlighting the positive impact of the revamped distribution strategy.

Therapy Portfolio Shows Broad-Based Strength

The company's growth is not confined to a single therapeutic area.

Across therapies, FY26 performance was encouraging:

The VMS segment continues to be the primary growth engine, but rising contributions from gynaecology and respiratory therapies provide additional diversification.

Financial Outlook Remains Strong Through FY28

ICICI Securities forecasts continued growth across all key financial metrics.

The brokerage expects revenue CAGR of nearly 12% between FY26 and FY28, supported by continued brand momentum and improved market penetration.

Exceptional Return Ratios Strengthen Investment Case

P&G Health continues to stand out among healthcare peers for its capital efficiency.

The company is projected to deliver:

FY26 RoE of 73%
FY26 RoCE of 91.1%
Debt-free balance sheet
Strong free cash flow generation

Such metrics reflect a highly efficient business model with minimal balance sheet risk.

Investment View: Premium Valuation Supported by Quality Growth

ICICI Securities believes P&G Health has entered a more stable and predictable growth phase following the successful execution of its distribution overhaul. The combination of powerful consumer healthcare brands, expanding margins, strong cash generation, and leadership in India's growing VMS market supports the brokerage's positive outlook.

Stock Call: BUY

Current Market Price: Rs 6,240

Target Price: Rs 7,535

Upside Potential: 21%

Valuation Basis: 27x FY28E EPS of Rs 279.1

While investors should monitor the sustainability of the new distribution model and potential competitive intensity in the VMS category, the brokerage believes P&G Health remains well-positioned to compound earnings and shareholder value over the medium term.