Hold Emami; target of Rs 270: Emkay Global Financial

Emkay Global Financial recommended hold rating on Emami with a target price of Rs 270 in its research report dated August 08, 2020.

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August 11, 2020 / 16:17 IST

26 Aug, 2025 12:21

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Emkay Global Financial's report on Emami

Emami’s Q1FY21 performance came in above expectations, with revenue and EBITDA at Rs4.8bn and Rs1.2bn, respectively. Decline in domestic business stood at 26%, international portfolio at 18% and CSD at 38%. The domestic business was impacted by a 41%/33%/70% fall in Navratna/KeshKing/Male Grooming. Healthcare/Pain management/BoroPlus grew 23%/15%/28%. Secondary sales fell 15%. June/July saw a strong recovery at over 8%, pointing to a better Q2. Input prices remained soft, which should continue to drive the gross margin expansion. Management hopes to maintain profitability as high GM and cost savings (~Rs500mn in FY21) may offset the decline in sales.

Outlook

Valuations at 21x FY22E are cheaper than peers and have de-rated on account of growth challenges over the last five years. Recovery in June/July is positive but we await better visibility on growth initiatives. We maintain Hold with a revised TP of Rs270 (from Rs240).

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