Brokerages raise target prices on Emami, see 23% upside; stock surges 15%

Over the past year, Emami shares have risen around 29 percent.

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Brokerages retained their bullishness on Emami Ltd, increasing their target prices following its positive earnings report for the quarter ended March.

On May 29, Emami posted a 3.7 percent rise in net profit for the fourth quarter at Rs 146.8 crore, compared to Rs 141.6 crore in the corresponding quarter of the previous fiscal.

The FMCG player's revenue clocked in at Rs 891.2 crore for the quarter, higher by 6.6 percent on-year from Rs 836 crore in the same period last year.

The FMCG player's shares zoomed 15 percent, hitting a fresh high in trade. At 9.40 am, Emami shares were quoting 14.8 percent on the NSE at Rs 600 per share.

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The company is optimistic with a strong summer and potentially a good monsoon, and aims to achieve sustainable and profitable volume-driven growth. However, it will not be aggressive in price increases for the year. It is expecting price hikes up to 2 percent in FY25.

Therefore, domestic brokerage Nuvama Institutional Equities hiked its price target to Rs 645 per share (23 percent upside), while retaining its buy call.

Goldman Sachs also bumped up its target price on Emami to Rs 640, from Rs 560 earlier, while keeping its buy rating intact. This indicates an upside of 22 percent from the previous close.

The brokerage said the firm's growth pickup and low valuations provides an opportunity for strong returns. The volume growth pickup in the fourth quarter was a major positive surprise, with recovery in the rural segment driven by expansion in distribution.

Emami has felt the brunt of weak rural demand and seasonality for the last couple of years. We see the outlook improving, given improving seasonality and rural rebound, said Emkay Global. The brokerage reiterated buy, while increasing the fair value of the share to Rs 625 apiece.

Over the past year, Emami shares have risen around 29 percent as against a 22 percent rise in the frontline index Nifty 50 during the same time period.

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