Buy Emami; target of Rs 595: Khambatta Securities

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26 Aug, 2025 12:21

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Khambatta Securities' research report on Emami

Emami delivered robust sales growth of ~18% y-o-y in 1Q FY23, driven by the Dermicool brand (acquired in March this year) to a large extent. Excluding Dermicool, sales growth was ~10% in the quarter. With 90% of Dermicool sales generated in 1Q and the remainder 10% in 2Q, revenues will be driven by other products in the coming quarters of the current financial year. Margins witnessed pressure due to higher raw material costs, which increased CoGS as a percentage of operating revenues by ~340 bps in 1Q FY23. We have marginally adjusted our margin assumptions based on the latest data-points. The Emami stock witnessed robust appreciation, followed by subsequent corrections to stand at 27% higher, since we initiated coverage on the company with a BUY rating on 23 September 2020. Since our last update report dated 18 May 2022, the stock has gained 6%.

Outlook

The Emami stock is currently trading at an attractive valuation of ~26x FY24E. We maintain a BUY rating on Emami with a price target of Rs 595 (reduced from Rs 601) based on P/E of 34x FY24E EPS, informing a 28% upside from current levels.

For all recommendations report, click here

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Emami - 190822 - khamb