Emami Q4 Results Preview: Volume Growth, Summer Portfolio To Drive Revenue

FMCG major Emami Ltd. is set to announce its financial results for the January–March quarter on Friday, with brokerages diverging on margin expansion expectations, on account of promotional spending and employee costs.

Most analysts tracking the FMCG sector see the March quarter earnings as largely stable but lacklustre, with pricing rather than volume driving growth.

Input cost pressures and unfavourable mix are expected to keep margins under check.

As per Bloomberg estimates, Emami’s consolidated revenue for the March quarter is expected to fall 10% year-on-year to Rs 944 crore, compared to Rs 1,049 crore a year ago.

Ebitda is likely to fall 34%, down to Rs 222 crore from Rs 339 crore, while margin is expected to contract to 23.5% from 32.3% a year ago. Net profit is seen rising to Rs 628 crore for the quarter.

• Revenue seen 10% lower at Rs 943.8 crore versus Rs 1,049.4 crore.

• Ebitda seen 34% lower at Rs 222 crore versus Rs 338.6 crore.

• Margin seen at 23.5% versus 32.3%.

• Profit seen at Rs 627.6 crore versus Rs 278.99 crore.

• Jefferies expects a volume growth of 3%, mirroring third quarter volumes, expected to drive revenue.

• Expects gross margins to expand 40 basis points, but rising promotional spends and high employee costs are set to drive Ebitda down on an annual basis.

• Products such as cooling hair oil and prickly heat powder are expected to benefit from a strong start to summer.

• Jefferies notes that FMCG demand trends in the March quarter remain similar to the quarter before, with no major improvement in urban demand, but gradual recovery in rural markets.

• Axis Capital expects a 4% growth in volume, to aid a 6% growth in revenue.

• Revenue growth is expected to be led by summer portfolio and healthcare.

• Noted sequential improvement in Smart & Handsome, Kesh King, and The Man Company.

• Gross margins are expected to grow 120 basis points, but foresee a contraction in Ebitda by 20 basis points.

• Goldman Sachs sees a continuation of the weak urban demand and flat volume growth in the March quarter, despite pricing-driven revenue growth.

• The brokerage similarly expects a 6% growth in revenue driven by growth in volume.

• Sees an increase in growth in summer products like talcum powder and cooking oil.

• Expects a modest margin expansion citing benign key input costs.

• IIFL Capital predicts a volume growth of 5%, and a sales growth of 6% for the quarter ended March.

• Domestic growth is expected to drive consolidated growth, as international business could be subdued.

• IIFL Capital expects Smart & Handsome to perform well, while Kesh King is likely to see a revival while still posting negative growth on an annual basis.

• While IIFL sees 4% growth in Ebitda, margins are expected to go down 50 basis points on account of staff costs.

• Philip Capital sees a mid-single digit volume growth led by summer portfolio.

• Kesh King and Fair & Handsome portfolio are expected to remain under stress on account of category headwinds.

• Promotional spending is likely to cause to a contraction of 50 to 60 basis points.

• Philip Capital expects urban demand to gradually recover, while rural demand momentum is seen to pick up pace.