Buy Emami; target of Rs 510: Motilal Oswal

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

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26 Aug, 2025 12:21

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Emami’s consolidated sales growth of 5.4% YoY (flat volume growth) was broadly in line with our expectation. However, higher-than-anticipated material costs and 10% absolute increase in ad-spends YoY (at a time when peers have been reducing the same to offset material cost-led pressures) resulted in an 18% miss on EBITDA for 4QFY22. It is heartening, though, that Emami is investing on growth. On a full-year basis, its ad-spends-to-sales ratio expanded 50bp YoY and its investments on Project Khoj (to augment rural distribution) also continued.

While sales growth continued to be unimpressive for a company of its size (with a five-/three-/two-year CAGR of 5.1%/5.8%/9.7%, respectively), the trend is getting relatively better. Maintain BUY with a TP of INR510.

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