Edelweiss's research report on EmamiEmami’s Q4FY16 revenue and EBITDA were slightly ahead, while PAT was below our estimates due to higher depreciation (one‐time write off of goodwill of INR105mn and moulds). The 6.5% YoY organic volume growth was promising led by strong growth in Boroplus and Zandu health care and balms. Kesh King sales of INR600mn were below our expectation of INR680mn, though management expects INR3bn sales in FY17 – in our view, Patanjali remains a key risk to this. Revamp of portfolio coupled with harsh summer and good monsoon are key triggers. Maintain ‘BUY’. We expect 42.7% EPS CAGR over FY16‐18 and 1400bps YoY expansion in RoCE over FY16‐18. Emami will be key beneficiary of a harsh summer and strong monsoon prospects, which will boost rural growth (contributes ~50% to revenues). At CMP, the stock is trading at 19.2x FY18E EV/EBITDA. We recommend ‘BUY’ and rate the stock a ‘Sector Outperformer’ with a target price of INR1,230. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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