Prabhudas Lilladher's research report on Emami
Emami’s Dermicool acquisition for Rs4.32bn funded by internal accruals will make it a market leader in cool talc category. Assuming mid-single digit growth and synergy benefits, we believe it will add Rs0.16 and Rs0.22 to EPS (net of Interest income loss and ex Amortization). We believe that the move is positive, but not a game changer as it does to change the seasonality impact in the company. Near term growth remains a concern given slowdown in rural demand and sharp jump in input costs in past month. While we expect 2/3% price increase in April, poor demand and high inflation will impact profit growth in 1H23 on a high base. We cut EPS estimates of FY23/24 by 5.9/1.3% amidst near term uncertainty.
We estimate 11.7% PAT CAGR over FY22-24 and value the stock at 30xDec23 EPS and assign a value of Rs607/share. We believe Rs1.6bn buyback, Dermicool acquisition and strong FCF limit downside at 21.6xFY24 EPS. Retain Accumulate.
At 13:26 hrs Emami was quoting at Rs 446.45, down Rs 3.50, or 0.78 percent.
It has touched an intraday high of Rs 464.80 and an intraday low of Rs 442.50.
It was trading with volumes of 31,250 shares, compared to its thirty day average of 33,461 shares, a decrease of -6.61 percent.
In the previous trading session, the share closed down 0.14 percent or Rs 0.65 at Rs 449.95.
The share touched its 52-week high Rs 621.35 and 52-week low Rs 446.00 on 24 August, 2021 and 07 March, 2022, respectively.
Currently, it is trading 28.15 percent below its 52-week high and 0.1 percent above its 52-week low.
Market capitalisation stands at Rs 19,845.32 crore.
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