Buy Emami; target of Rs 460: Sharekhan

Sharekhan's research report on Emami

Emami’s Q4FY2023 performance was soft, impacted by muted demand for discretionary categories and unseasonal rains affecting summer products, with 8.5% y-o-y revenue growth to Rs. 836 crore. However, correction in input costs led to a 262-bps y-o-y rise in OPM to 23.9%. Management expects the domestic business to grow by 8-10% in FY2024, while the international business is likely to grow by ~20% y-o-y. The healthcare business is expected to recover to doubledigit growth. With raw-material prices correcting from their highs, gross margin is expected to expand by ~250 bps y-o-y in FY2024, while OPM is expected to be higher than 27% for FY2024 and improve consistently in the coming years as the mix improves.

Outlook

The stock has corrected by 11% in the past six months and trades at 20.4x/17.2x its FY2024E/FY2025E earnings. We maintain Buy with a revised PT of Rs. 460.

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