Reduce Emami; target of Rs 232: HDFC Securities

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

live

• bselive
• nselive

Volume

Todays L/H

More

×

HDFC Securities' research report on Emami

Emami posted a weak 1QFY21 as revenue/EBITDA declined by 26/8% YoY (HSIE -19/-9%). The domestic revenue decline of 26% YoY (volume decline of 28%) was due to the Navratna range, Male Grooming and Kesh King declining by 41/70/33% YoY. However, Boroplus, Healthcare, and Pain management clocked a strong growth of 28/23/15% YoY. The company saw sequential improvement in revenue growth (+8% YoY in June and double-digit growth in July), led by healthcare and pain management. The pick-up is driven by (1) healthy growth in rural markets, (2) new launches (5% contribution), and (3) channel filling. At the same time, sharp cost control (A&P down by 54% YoY) led to 487bps YoY expansion in EBITDA margin. Despite strong growth in June/July, we expect core categories to improve gradually.

Outlook

However, we increase our EPS estimate by 5/3/3% for FY21/FY22/FY23 on account of the strong traction in healthcare and pain management along with benign raw material prices. We value Emami at 18x P/E on Jun-22E EPS and derive a target price of Rs 232. Maintain REDUCE.

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.

Read More