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Buy Emami; target of Rs 550: Sharekhan

Sharekhan is bullish on Emami has recommended buy rating on the stock with a target price of Rs 550 in its research report dated July 29, 2022.

July 31, 2022 / 02:42 PM IST
The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

 
 
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Sharekhan's research report on Emami


Emami’s revenues grew by 17.8% driven by 13% growth in the domestic business and a 45% growth in the international business. Organic revenue grew by ~10% (ex-Dermicool). Gross margins and OPM decreased by 341 bps each due to unfavourable mix and higher input cost. Domestic volumes grew by 8% on a high base of 38% volume growth in Q1FY2022. Excluding the recently-acquired Dermicool brand (8% contribution to revenues) and healthcare products and pain management volumes grew strongly by 24%. Management is eyeing double-digit growth in the medium term through improved growth in hair oil and skincare category, new recruitments through bridge packs in key categories and expansion in distribution network (especially in rural markets). Better monsoons could lead to revival in rural demand. The stock is currently trading at 24.7x/20.1x its FY2023/FY2024E earnings.


Outlook


We maintain Buy with an unchanged PT of Rs. 550.


For all recommendations report, click here

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Emami - 290722 - khan

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first published: Jul 31, 2022 02:39 pm
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