Buy Emami; target of Rs 625: Emkay Global Financial

Emkay Global Financial's research report on Emami

Our positive stance on Emami is underpinned by its enhanced focus, further to which Company has roped in professionals who are helping it get the right fit to address wider consumer needs. We continue to consider Emami’s healthy margin profile as an enabler of its topline journey. In a muted demand setting, Emami posted better than expected Q2FY24 results, with revenue growth at 6% (domestic growth: 4%; volume growth: 2%), while the 300bps margin expansion aided a 20% growth in EBITDA and a 19% growth in earnings (6% above estimate). Capturing the better margin, we nudge up our FY24E earnings by 3%, with FY25-26E earnings remaining unchanged.

Outlook

We maintain BUY with Sep-24E TP of Rs625 (on 31x P/E). High rural revenue concentration provides an edge on demand recovery for Emami, while seasonality remains the key risk.

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