Buy Emami, target price Rs 440: Motilal Oswal

Motilal Oswal has given a buy rating to Emami with a target price of Rs 440. The share price moved up by 1.04 per cent from its previous close of Rs 370.65. The stock’s last traded price is Rs 374.50.

Emami Ltd., incorporated in the year 1983, is a Mid Cap company (having a market cap of Rs 16680.38 Crore) operating in FMCG sector.

Financials
For the quarter ended 30-09-2020, the company reported a Consolidated sales of Rs 734.82 Crore, up 52.66 % from last quarter Sales of Rs 481.34 Crore and up 11.33 % from last year same quarter Sales of Rs 660.05 Crore Company has reported net profit after tax of Rs 119.27 Crore in latest quarter.

Investment Rationale
Better-than-expected results have led to a 21.5%/8.3% upgrade in FY21E/FY22 EPS forecasts, respectively. The brokerage maintains Buy, encouraged by various factors. (a) Valuations are inexpensive at 26.1x FY22E EPS. (b) The sale of the cement business has led to a reduction in the pledge. (c) Just like other peers with higher rural salience, HMN too has tailwinds in FY21 – as prospects in rural appear brighter than in urban (50% of HMN’s domestic sales come from rural).

Promoter/FII Holdings
Promoters held 53.9 per cent stake in the company as of Sept 30, 2020, while FIIs held 9 per cent, DIIs 28.6 per cent and public and others 8.6 per cent.