Dolat Capital recommended accumulate rating on Emami with a target price of Rs 283 in its research report dated August 07, 2020.
Dolat Capital's research report on Emami
Emami’s Q1FY21 revenues came in line but EBITDA and APAT was a beat. Domestic business declined 26%, while IB posted 18% revenue de-growth in Q1. Supply chain disruption in April due to Covid-19 resulted in sales decline. Secondary sales decline was ~15% during the quarter vs 26% primary sales decline. Distributor inventory days declined from 29-30 days in March to ~27 days in June and ~19-20 days in July end. This signifies that the secondary sales growth in July was better than primary sales. Emami reported double digit growth in July, which was a key positive. IB gained momentum in July. Crème-21 is expected to maintain strong growth going ahead. We believe that competition in Emami’s key product categories such as skin, and hair oil, will continue to remain high. Nevertheless, we remain optimistic about the favorable base, and growth in health and hygiene market.
Outlook
As most of the negatives are factored in the stock price, we maintain Accumulate rating with TP of Rs 283 (20x FY22E CEPS).
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