Motilal Oswal is bullish on Emami has recommended buy rating on the stock with a target price of Rs 665 in its research report dated 02 Aug 2018.
Motilal Oswal' research report on Emami
Consolidated revenue on like-to-like (LTL) basis grew 19% YoY, with volume growth of 16% YoY. Domestic (86% of sales) volumes grew 18% YoY, leading to LTL sales growth of 21%. Gross margin expanded 10bp YoY to 66.3% in 1QFY19. EBITDA margin expanded 490bp YoY to 20.1% (our estimate: 21.1%), as ad spends declined as a percentage of sales (-380bp YoY) and other operating expenses were lower.
Outlook
With earnings growth prospects brightening, valuations of 33x appear inexpensive and 20% discount to peers is unwarranted. We maintain BUY with a target price of INR665 (attributing 37x June 2020E EPS, 10% discount to 3-year average).
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