Buy Emami; target of Rs 560: Motilal Oswal

Motilal Oswal is bullish on Emami recommended buy rating on the stock with a target price of Rs 560 in its research report dated August 08, 2023.

Broker Research

August 10, 2023 / 14:40 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Emami

HMN reported in-line sales in 1QFY24 (up 6.8% YoY). Domestic business, excluding summer portfolio, grew 16% YoY in 1QFY24, contributing to overall 7% YoY growth. Pain Management, Healthcare, and BoroPlus led with strong double-digit growth, while Dermicool saw high single-digit growth. Seasonal factors affected Kesh King and Male grooming, and unexpected rains caused a 5% summer portfolio decline. The management has guided for 200-250bp expansion in EBITDA margin in FY24 and aggressive focus category advertising. It is anticipating doubledigit growth in Male grooming from Q2FY24. International business is expected to continue its growth trajectory, anticipating improved results due to the benefit of softer raw material prices. The company is also forecasting a gross margin improvement in FY24. We reiterate our BUY rating, as 1) HMN with over 50% of sales from the rural segment could be a beneficiary of a gradual rural revival; 2) valuations are inexpensive at 24xFY25E EPS; 3) improving revenue performance and investments in terms of rural distribution expansion and ad-spends in recent times.

Outlook

Valuations are inexpensive at 20x FY25 EPS and hence we reiterate our BUY rating with a TP of INR 560 (based on 24x FY25 P/E multiple).

For all recommendations report, click here