Emami’s share price climbed 5% to Rs 545.25; however, it retreated 0.73% to Rs 515 a day after the company posted consolidated net profit for the second quarter of FY24 at Rs 178.50 crore, down 3.1% as compared to Rs 184.18 crore during the same period last year. It posted revenue from operations at Rs 864.87 crore, up 6.3% compared to Rs 813.75 crore during the second quarter of FY23. “The company demonstrated remarkable resilience in the second quarter and half-year ending on September 30th 2023, overcoming challenges such as poor monsoons, food inflation, and subdued demand in rural markets,” Emami said.
Emami’s stock price has gained 0.50% in the last five days, 1.43% in the last one month, 35.44% in the last six months and nearly 20% year to date.
Prabhudas Lilladher: Accumulate – Target Price: Rs 564
“We increase our FY24E/FY25E EPS estimates by 3.6%/2.1% following higher than expected gross margin expansion and higher volume growth at 2% in 2Q. Emami is investing for growth with 1) new launches in existing categories like Boroplus, Zandu, Kesh King and new product launches in D2C 2) investment in new D2C new age businesses & Modern Trade 3) increase in direct town coverage to 60k and 4) strengthen its healthcare portfolio with acquisition of Axiom Ayurveda (blend of fruit juice and aloe Vera). We estimate 9.6% PAT CAGR over FY23-26 and value the stock at 26x Sep25 EPS assigning a value of Rs 564 (Rs524 earlier). Retain ‘Accumulate’.”
Motilal Oswal Financial Services: Buy – Target Price: Rs 640
“There is no material change to our FY24/FY25 EPS estimates. HMN’s sales CAGR of 8.7% over FY20-23 was far better than the 3% sales CAGR over FY16-20. We believe future growth will be driven by investments in new brands, double digit growth CAGR in the international market, rural distribution expansion and recovery in the rural market (over 50% sales). There is also margin improvement scope in the E-commerce and MT channels. Valuations are inexpensive at 19.5x FY25 EPS; hence we reiterate our ‘Buy’ rating with a Target Price of Rs 640 (based on 28x FY25 P/E multiple).
ICICI Securities: Add – Target Price: 580
“We cut our earnings estimates by ~1% FY24-25E largely due to lower revenue growth expectations; modelling revenue / EBITDA / PAT CAGR of 9 / 14 / 20 (%) over FY23-25E. Maintain ‘Add’ with a DCF-based revised TP of INR 580 (was INR 600 earlier). At our target price, the stock will trade at 26x P/E multiple Mar’25E. Key downside risk is sustained slowdown in rural demand.”
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