Motilal Oswal is bullish on Emami recommended buy rating on the stock with a target price of Rs 245 in its research report dated June 29, 2020.
Motilal Oswal 's research report on Emami
Emami (HMN) reported another quarter of disappointing earnings growth, along with guidance for a weak 1QFY21. - However, the company also has the highest dependence on rural sales to domestic sales (around half) among peers. With the rural outlook likely to be positive over the next 12-18 months relative to urban, HMN has the opportunity to recover after a likely weaker 1QFY21 v/s peers. However, its high wholesale dependence and the relative discretionary nature of its portfolio may hamper sharp recovery. - The impending conclusion of the group cement business transaction within the next fortnight is a positive. Valuations are inexpensive at 16.0x FY22 EPS.
Maintain Buy, on account of: a) an improving rural outlook (HMN has the highest domestic sales proportion among peers at around 50%), b) the announcement on the call that the group cement business sale would be concluded within the next fortnight, thereby sharply removing the pledge, and c) inexpensive valuations of 16x FY22 EPS.
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