Emami's third quarter consolidated profit after tax may increase 10.2 percent year-on-year to Rs 166 crore, according to the average of estimates of analysts polled by CNBC-TV18.
Total income of the skincare and healthcare FMCG company is seen rising 16.7 percent to Rs 682 crore during October-December quarter from Rs 585 crore in same quarter last fiscal.
Operating profit may jump 14.3 percent year-on-year to Rs 202 crore but margin may decline 60 basis points to 29.6 percent in the quarter gone by.
Expectations
Analysts expect mix of new launches (6 percent growth contribution), price hikes and organic volume growth to drive revenue momentum this quarter
Delayed winter may have bearing on seasonal products – so performance of winter portfolio could be muted
Delayed winters could curtail topline growth vis-a-vis the historical 20 percent topline growth trend we have seen for the past few quarters.
However, this factor may get normalized in Q4 because the pick up in winters was very strong.
Volume growth for the quarter is seen between 8-10 percent driven by new product launches in grooming category (deodorants, hair oils, face wash), which is on a low base of 1.5 percent last year
Domestic volume growth could surprise on the upside with a double digit growth figure (Volume growth stood at 11 percent Y-o-Y in Q2FY15 on base of 6 percent)
Topline growth may further benefit from around 6-7 percent price hike as well
Sustained easing in mentha oil costs may aid gross margin expansion (could be over 200 basis points Y-o-Y) (Mentha oil prices fell 17-18 percent Y-o-Y).
However, increased employee costs and marginal jump in ad-spends may dampen the overall operating margins
Performance may also be impacted due to high base on the EBITDA front as Emami saw 13.9 percent decline in ad spends in Q3FY14 due to delayed winters resulting in significant margin expansion
International business growth is seen at around 25 percent Y-o-Y (base quarter grew 37 percent Y-o-Y) on a low base and healthy uptick in Middle East & Bangladesh
Tax rate is seen at 19-20 percent as per management guidance (tax rate may be higher due to exhaustion of tax benefit of Zandu acquisition)
Key issues to watch for:
Volume growth and broad consumer demand for its categories
Outlook on mentha oil prices
Update on deodorant category entry, SHE acquisition and strategy around new launches going forward
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