Prabhudas Lilladher's research report on Emami
We increase our FY24E/FY25E EPS estimates by 3.6%/2.1% following higher than expected gross margin expansion and higher volume growth at 2% in 2Q. Emami has given cautiously optimistic outlook given benign raw material prices, expected pickup in rural demand and likely traction from various new launches under Zandu and international business. 2Q saw volume growth of 2% led by robust growth in both MT & E-com channel. HMN remains positive on OTC Healthcare, Navratna & new launches under Boroplus. Emami is investing for growth with 1) new launches in existing categories like Boroplus, Zandu, Kesh King and new product launches in D2C 2) investment in new D2C new age businesses & Modern Trade 3) increase in direct town coverage to 60k and 4) strengthen its healthcare portfolio with acquisition of Axiom Ayurveda (blend of fruit juice and aloe Vera).
Outlook
We estimate 9.6% PAT CAGR over FY23-26 and value the stock at 26x Sep25 EPS assigning a value of Rs564 (Rs524 earlier). Retain Accumulate.
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