HDFC Securities' research report on Emami
Emami delivered a strong set of numbers with revenue/EBITDA growth of 15/29% YoY (HSIE 12/23%). The growth was driven by a broad-based pick-up in discretionary demand and strong performance of the winter portfolio. Healthcare and Boroplus led the revenue growth and the winter portfolio benefited from channel filling, following the weak performance in 2QFY21 (- 39% YoY). Kesh King sustained its momentum with 16% YoY growth (base +18%). Strong performance in MT and e-comm also supported growth. International business performed well, led by SAARC and MENAP markets. EBITDA margin expansion was robust (400bps YoY) despite high RM inflation, as the company was able to execute its cost control initiatives. We expect Emami to sustain its growth, led by continued recovery in discretionary demand. While restoration of normal operations and RM inflation will bear down on margins, we expect EBITDA margin to remain healthy (but expansion may be muted in FY22).
We increase EPS FY22/FY23 by ~4%. We value Emami at 25x P/E on Mar-23E EPS to derive a TP of Rs 425. Maintain REDUCE.