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Emami share price gains after Q3 profit rises 45%; CLSA downgrades stock to outperform

Revenue from operations was up 14.89 percent at Rs 933.61 crore in the quarter under review as against Rs 812.64 crore in the same period a year ago.

January 28, 2021 / 09:48 AM IST
Emami products | Representative images

Emami products | Representative images

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Emami share price was trading higher in the morning session on January 28 after the company declared its Q3 results.

The homegrown FMCG firm on January 27 reported 44.67 percent rise in consolidated net profit at Rs 208.96 crore for December quarter 2020 helped by sales growth and cost control measures. The company had posted a profit after tax of Rs 144.44 crore for the year-ago period, Emami said in a regulatory filing.

Revenue from operations was up 14.89 percent at Rs 933.61 crore in the quarter under review as against Rs 812.64 crore in the same period a year ago. During the quarter, both profits and margins of Emami increased significantly. Stringent cost control measures and benign raw material prices, helped the company improve its margins, said Emami in an earning statement.

Total expenses were at Rs 593.42 crore in the latest quarter, up 8.16 per cent from Rs 548.62 crore in the same period a year ago. Led by a favourable season and a favourable consumption environment, the company posted a strong growth of 16 per cent in its domestic business led by 13 per cent growth in volumes. The quarter witnessed an all-round growth across major brands, said Emami.

The stock was trading at Rs 489.15, up Rs 6.60, or 1.37 percent. It has touched an intraday high of Rs 497.10 and an intraday low of Rs 487.05.


Emami Director Mohan Goenka said, "Some of our brands in the healthcare & hygiene range, winter portfolio and 7 oils have done exceedingly well during the quarter, signifying positive consumer sentiment. Rural offtakes continue to march ahead of Urban, which too has started picking up. Emami's international business also grew strongly by 26 per cent led by MENAP (Middle East, North Africa and Pakistan) and SAARC regions during the quarter."

On the outlook, Goenka said: "We are optimistic to close the year not only on a positive note but expect to post a high single-digit overall growth. Shares of Emami were trading at Rs 481.95 apiece on BSE, down 0.62 per cent from the previous close."

However, global research firm CLSA has downgraded the stock to outperform from buy with a target of Rs 520 per share due to limited upside. It is of the view that the company reported decent Q3 but with tailwinds in the price adding that favourable base is likely to support near-term relative outperformance, according to a CNBC-TV18 report.

CLSA feels that the healthcare portfolio had a better delivery with 38 percent YoY growth. Winter centric Boroplus disappointed with lower-than-expected 21 percent growth.

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Moneycontrol News
first published: Jan 28, 2021 09:48 am
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