Buy Emami; target of Rs 1230: HDFC Securities

HDFC Securities' research report on Emami

Emami’s  consolidated  revenues  grew by 12% on a like-like basis (in-line) driven  by  9% volume growth. We were surprised with EBITDA/APAT decline of -3/-5% vs. expectation of 9/3% respectively. Domestic   business   grew   by  10%  driven  by  growth  in  Navratna/Pain Management/Male  Grooming/Kesh  King  hair  oil  of  14/13/8/11%.  Boroplus (off-season)  and Healthcare range (impacted by Pancharishtha) disappointed as both declined by 2%. International  business  bounced  back  with  37%  growth,  albeit  with  a favorable  base  (-38%).  MENAP  and  SAARC (combined 75% of international) regions  picked  up  growth  after  lackluster  performance in the previous quarters.

Outlook

We value Emami based on P/E of 36x on Mar-20 EPS to arrive at a TP of Rs 1,230. We maintain BUY.