Prabhudas Lilladher's research report on Emami
We cut our EPS estimates of FY20-21 by 1-1.4% led by 1) muted revenue growth guidance of only 8-9% for the balance year and 4) Structural issues in F&H and Pancharishta which are likely to drag for another six months. 1Q performance remained muted due to 1) only 2% overall volume growth and flat Domestic volumes 2) only 4% sales growth in Navratna despite its peak season and 3) decline in gross margins on higher raw material costs. We remain positive on Emami led by 1) sustained market share gains in core
categories despite challenging environment, 2) increased traction in Kesh king post its relaunch and decrease in competitive intensity by Patanjali and 3) improved performance in 7 oils in one hair oil. Growth in International business was mainly led by acquisition of Crème 21. We believe margins to expand from the current level as Mentha prices have corrected by 22.3% since Mar'19. Seasonality remain a key challenge in the stock.
Outlook
We estimate 10.3% Adj. PAT CAGR over FY19-21 and value the stock at 28x June21 EPS to arrive at a price target of Rs 386. Retain Accumulate.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!