Edelweiss's research report on EmamiEmami posted weak Q1FY16/Q2FY16 results impacted by soft domestic volume growth, lower than expected performance by Kesh King, due to which, the stock plunged by 25%/10% respectively. We believe current price factors in most concerns making it an attractive long term bet, notwithstanding expected weak Q3FY16 volume growth. Kesh King’s sales are improving (normalised Q4FY16 sales, considering launch of smaller SKUs; FY17 sales estimated at INR 3.20bn against INR1.8bn in FY16). We believe Emami can bounce back strongly in FY17 taking cue from a strong double‐digit volume growth in FY15 after a soft FY14, led by market share gains and innovations (garnered ~1,000bps market share in Navratna oil in FY15). Soft mentha and LLP prices also bode well for margins. Maintain ‘BUY’.We like Emami’s improvement in mix (led by Kesh King) and strong market share gains. Emami has, historically, always emerged stronger from lows and we anticipate an encore this time around as well. At CMP, the stock is trading at 23.3x FY17E EV/EBITDA. We recommend ‘BUY’ and rate it a ‘Sector Performer’. 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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