Buy Emami; target of Rs 500: Sharekhan

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Sharekhan's research report on Emami

Emami’s Q3FY2023 numbers were muted, affected by weak rural demand and a delayed winter. Revenue stood flat while operating profit decreased by 14% y-o-y during the quarter. The management is expecting a 10-12% revenue growth in FY2024 with expected recovery in the rural demand and improved growth in some key categories such as healthcare products and pain management. With raw material prices correcting from its highs, OPM is expected to improve substantially in Q4. It expects OPM to stand at 27% for FY2023 and improve consistently in the coming years as the mix will improve.

Outlook

The stock trades at 24.4x/20.8x/17.2x its FY2023E/FY2024E/FY2025E earnings. We maintain Buy with a revised PT of Rs. 500.

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Emami - 06 -02 - 2023 - khan