Emami Note – Buy: Growth was strong in all categories

Overall, we expect the strong revenue trajectory to continue thanks to a continued focus on health and hygiene. However, the company’s summer portfolio will likely be affected in Q1 FY22 by the wave of Covid 2. Hold the purchase with a revised TP of Rs 610 as we move to September 2022E.

The consolidated sales of Emami in the fourth quarter of FY21 (up 37.2% yoy) and PAT (up 190.8% yoy) exceeded our estimates, while that EBITDA (up 65.2% year-on-year) fell below estimates. On the strength of the good performance of the healthcare portfolio, domestic volumes grew by 39% year-on-year on a soft basis of -19%. While the two-year revenue CAGR is 6.9%, the volume CAGR is 6.1%. Although mentha prices are benign, the rise in other commodities caused gross margin compression by 249 basis points year-on-year.

Related news

  • Stocks in brief: TCS, PNB, HUL, Emami, PVR, Shriram Transport Finance, Manappuram Finance

  • US Stocks, Apple, Stock Split, iPhone Maker, US Tech Companies, US Tech Stocks

    Featured stocks: HPCL, HDFC AMC, SBI Life, Emami, Muthoot Finance, JK Cement, banking stocks

  • Maintain “buy” on Emami: Edelweiss

Overall, we expect the strong revenue trajectory to continue thanks to a continued focus on health and hygiene. However, the company’s summer portfolio will likely be affected in Q1 FY22 by the wave of Covid 2. Hold the purchase with a revised TP of Rs 610 as we move to September 2022E.

Strong Growth Across All Categories: Strong revenue and volume growth was positive, as was strong performance in the healthcare and pain management line-up. However, the gross margin compression of 249 bps yoy and 771 bps yoy was disappointing. T4FY21 witnessed strong overall performance among brands with Healthcare Line, Navratna, Pain Management and 7 Oils in One, showing growth of 48%, 13%, 33% and 45% , respectively, on a two-year basis (T4FY21 vs. Q4FY19). Kesh King and BoroPlus grew strongly in the fourth quarter, but only rose 7% and 5%, respectively, over two years. International business grew 21% on a two-year basis.

Outlook: Positive – We expect robust income growth to support a higher rural contribution and focus on health and hygiene. In addition, the alleviation of pledging concern at the promoter level is an additional positive. We are keeping “BUY / SO” with a revised TP of Rs 610 (from Rs 595) as we move forward until September 2022nd. The stock is trading at 30.1x EPS FY23e.

Get live stock quotes for BSE, NSE, US market and latest NAV, mutual fund portfolio, see latest IPO news, top performing IPOs , calculate your tax by income tax calculator, know the best market winners, the best losers and the best equity funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest news and updates from Biz.

About Earl V.

Check Also

New Endocrine Testing Market Report Contains Size, Gross Margin, Revenue & Trend Forecast Report 2024 – NeighborWebSJ

“The final report will add the analysis of the impact of COVID-19 on this industry” …