Reduce Emami; target of Rs 400 : HDFC Securities

HDFC Securities recommended reduce rating on Emami with a target price of Rs 400 in its research report dated August 07, 2023.

Broker Research

August 10, 2023 / 17:00 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on Emami

Consolidated revenue grew by 7% (in-line) with domestic/international revenues growing by 7/8% YoY. Organic revenue/volume growth was c.4% and flat YoY. Emami’s revenue performance was impacted by unseasonal rain as a 16% growth in the non-summer portfolio was offset by a 5% decline in the summer portfolio. Navratna fell 8% while pain management, healthcare and BoroPlus grew in double digits. GM expanded by 240bps YoY to 65.4% on soft input costs. However, higher A&P spends and employee costs limited EBITDAM expansion to 60bps, which came in at 23%. EBITDA grew by 10% YoY (HSIE 7%). Emami plans to reinvest a large part of GM expansion in brand building, while still expecting EBITDAM to expand by 200-250bps YoY in FY24. The company remains cautiously optimistic about demand recovery, given (1) softening inflation, which could aid rural demand; (2) brand investments; and (3) near-normal monsoon.

Outlook

We remain cautious about core business growth, given the limited scope to add new consumers in niche categories. We value the stock at 20x P/E on Jun-25E EPS to derive a TP of INR 400. Maintain REDUCE.

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