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ICICI Securities Report
Our earnings estimates for Emami Ltd. are unchanged, modelling revenue/Ebitda/profit after tax compound annual growth rate of 10/15 /21(%) over FY23-25E.
Maintain 'Add' with discounted cash flow-based target price of Rs 600 (was Rs 520). At our target price, the stock will trade at 27 times price/earning multiple March 25E.
Key downside risk: Sustained slowdown in rural demand.
We met the management of Emami. Below are the key takeaways from our interaction:
it is extending brands into adjacencies to drive faster revenue growth,
priority is to improve productivity of retail outlets added under project Khoj through trade marketing initiatives,
improving profitability of modern trade and e-commerce channels (marginal impact on revenue growth in short term) and
merger and acquisition as a key growth driver.
There is high confidence in the ability and potential to achieve double-digit growth in the medium term.
We believe Emami has been taking several initiatives to drive growth; however, results were likely impacted by weak macros. Improving demand conditions are likely to change the trajectory.
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