Buy Emami; target of Rs 650: Motilal Oswal

Motilal Oswal is bullish on Emami recommended buy rating on the stock with a target price of Rs 650 in its research report dated October 30, 2021.

Broker Research

November 03, 2021 / 13:35 IST

HDFC Securities research report's outlook and valuations: "The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar."

26 Aug, 2025 12:21

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Motilal Oswal's research report on Emami

HMN’s 2QFY22 sales were in line with our expectations. Domestic sales/ volumes grew 9%/6.2% YoY. With a pickup in the pace of vaccination and diminishing fears of a severe third COVID wave, Healthcare grew only 5% YoY. Nevertheless, the segment was still up 26% on a two-year CAGR basis. On a positive note, revival in mobility led to double-digit growth in discretionary categories BoroPlus, Kesh King, and Male Grooming. While there has been some recent moderation in rural demand, its fundamentals are intact. The outlook for winter demand is positive. The International business (~15% of sales) declined by 6% YoY owing to the second COVID wave and a higher base of Personal Hygiene. Margin performance in 2QFY22 was better than expected due to price hikes, cost savings, and lower A&P spends. However, the management expects gross margin compression in 2HFY22, led by continued RM pressure. A&P spends are also expected to pick up, leading to a pressure on EBITDA margin in 2HFY22. -The key to a further re-rating would be whether sales growth, after a period of extremely weak performance (3.7% CAGR over FY16-20), can revive to double-digit levels on a sustainable basis. We maintain our Buy rating.

Outlook

We arrive at our TP of INR650/share (valuing the company at 32x Dec’23E EPS, a 40% discount to its peers).

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