Prabhudas Lilladher recommended accumulate rating on Emami with a target price of Rs 361 in its research report dated February 06, 2020.
Prabhudas Lilladher's research report on Emami
Emami's outlook remain muted given 1) tepid consumer demand 2) structural issues in Male grooming and Pancharishta 3) untimely inventory push for non-winter products. A lot depends upon the timely onset of summer and trade inventory buildup for Navratna in 4Q. We remain cautious on Emami on 1) low growth in key categories like premium hair oil, male skin creams and Pancharishtha 2) slowdown in rural demand given high dependence (54-55%) and 3) limited success in categories beyond traditional strongholds. Benign input costs are likely to support margins in medium term and will enable 12.3% Adj.
PAT CAGR over FY19-22. and value the stock at 23xFY22 EPS to arrive at a price target of Rs361 (Rs359 at 25xSept21EPS earlier). Retain Accumulate. Reduction in promoter pledge and revival in growth holds key to re-rating of the stock.
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