Buy Emami; target of Rs 635: Sharekhan

Sharekhan's research report on Emami

Emami’s Q4FY2024 operating performance was good as compared to the earlier quarter with a 6.4% volume growth; revenue grew by 7%; EBIDTA margin stood stable at 23.7%. Management expects an over 10% growth in FY2025, as rural demand recovers, distribution widens and strong summers aid good growth in summer centric portfolio in Q1FY2025. EBIDTA margins rose 120 bps y-o-y to 26.5% in FY2024. Margin expansion to sustain despite higher ad-spends in FY2025.

Outlook

Stock trades at attractive valuations of 24x/21x its FY2025E/26E earnings. Good recovery in rural demand will uplift Emami’s performance in FY2025. We maintain a Buy rating on the stock with a revised PT of Rs. 635.