Prabhudas Lilladher's research report on Emami
We upgrade HMN from Hold to Accumulate given positive outlook in nearterm, uptick in rural demand (53% of sales), favorable seasonality and inexpensive valuations. The Man company transition is over, and growth should improve, however the segment is facing intense competition. HMN has undertaken 1.5-2% price increase which should help sustain margins. Core brands of Kesh King and Smart and Handsome (9-10% of sales) remain under pressure, the impact of re-lunch and strategic initiatives will be visible in coming quarters. HMN has increased share of MT to 28.6% and higher growth (2x) in this channel is positive for improving mix. HMN has shown improvement in cashflows, dividend payout, and promoter pledge (9%).
Outlook
HMN is trading at 23.2xFY27 EPS post 36% fall from peak of Rs860, which cushions any significant downside in the stock. We estimate 13% PAT CAGR over FY25-27 and value the stock at 30x Mar’27 EPS assigning a value of Rs716 (Rs.761 earlier). Upgrade to Accumulate.
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