Buy Emami; target of Rs 450: Prabhudas Lilladher

Prabhudas Lilladher's research report on Emami

We are changing FY21/22/23 EPS estimates by 9.3%, 1.1% and -3.6% and increase target price to Rs450 @26xSept21 EPS (Rs419 earlier, valuing at 25xJune22EPS). We believe Emami is in a sweet spot given 1) highest rural salience at 55% of sales 2) early onset of winter and low base for winter portfolio and Pain Balms in 2H 3) benign input costs and Ad rates 4) market share gains in Kesh King and 5) capability building in sales/ E-com. We expect growth rates to further accelerate in 2H although we are not banking much on new launches as they are in highly competitive categories. We believe strong rural demand and favorable seasonal climate after several years is positive.

Outlook

Although promoter pledge at 40% remains a concern, indications of 40-50% dividend payout and net cash of Rs2.5bn in balance sheet will provide support. We estimate 9.3% CAGR in sales and 17.7% in PAT over FY20-23. Retain BUY
For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More