Cholamandalam securities is bullish on Emami has recommended buy rating on the stock with a target price of Rs 1341 in its research report dated May 04, 2018.
Cholamandalam Securities' research report on Emami
Reported consolidated revenue grew by 8.2% YoY & -18.3% QoQ to INR 6,170mn; on like to like basis (including GST/VAT & excise duty), revenue grew 12.3% YoY aided by the volume growth of 9%. Domestic business grew 10% YoY (Volume: +8% YoY), with rural and retail grew 15% YoY, modern trade grew 50% YoY (~6% of domestic revenue) and wholesale segment was flat; Share of wholesale channel has reduced significantly from 55% to 39% in 4QFY18. International business grew by 37% YoY led by robust performance in MENAP and SAARC market. CSD grew 1% YoY. In 4QFY18, Navratna range grew 14% YoY, led by double digit volume growth in cooling oils and market share increased by 190bps to 63.8%. Pain management business grew 13% YoY, due to double digit growth in Balm and maintained market share at 53.3%. Male grooming range grew 8% YoY, by gaining market share in fairness cream and face wash segment. Market share of F&H cream and face wash increased by 110bps and 230bps to 65.7% and 15.9% respectively. HE range witnessed a double digit volume growth.
Outlook
At CMP, Emami is trading at a P/E multiple of 56.6XFY19E and 45.5XFY20E. In terms of EV/Sales, Emami is quoting at 8.2XFY19E and 7.2XFY20E. We have valued Emami at EV/Sales of 9X FY20E with a BUY rating and a target price of INR 1,341. Risks: Sharp rise in the menthol price & crude derivatives could adversely impact the margin.
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