Accumulate Emami; target of Rs 409: Dolat Capital Market

Dolat Capital Market's research report on Emami

Emami’s Q2FY21 results came ahead of our estimates. Domestic business jumped 13%, while IB posted 11% revenue growth in Q2. Ex-winter products (88% contri) reported 28% growth was encouraging performance. Kesh King and Pain management range recorded highest ever quarterly sales during the quarter. Emami launched 8 new products during the quarter. NPD contributes 4% of total revenues. During Q2, rural grew by 20% (~55% contribution) while urban reported 8% increase. IB gained strong momentum led by double digit growth in SAARC (+22%) and MENAP (+12%). 7 Oils in One became highest selling brand in IB.

Outlook

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, especially in rural markets. Considering attractive valuations, we maintain Accumulate rating with TP of Rs 409 (23x FY23E CEPS).

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