Accumulate Emami; target of Rs 517: Prabhudas Lilladher

accumulate

Prabhudas Lilladher's research report on Emami

We increase our EPS estimates for FY24/FY25 by 3.4%/6.5% which factors in impact of easing raw material inflation, pickup in rural demand across categories (ex of summer portfolio) and increased ad spends behind core brands. 4Q results saw volume growth of 2% while summer portfolio was impacted due to unseasonal rains across India. Key categories like Pain Management and Health Care are expected to grow (after 2 years of COVID numbers in base) in FY24. Input cost pressures have come off, which gives promise for demand in upcoming quarters. Emami is investing for the future with 1) new launches in existing categories like Boroplus, Zandu and new product launches in D2C 2) investment in D2C businesses and Modern Trade 3) increase in direct town coverage to 60k (from 52k) by FY24 and 4) increasing ad-spend to gain market share.

Outlook

We estimate 19.4% PAT CAGR over FY23-25. We value the stock at 25x Mar25 EPS and assign a value of Rs517/share (Rs485 earlier). Retain Accumulate.

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Emami - 25 -05 - 2023 - prabhu