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Prabhudas Lilladher Report
We increase our FY24E/FY25E earnings per share estimates of Emami Ltd. by 3.6%/2.1% following higher than expected gross margin expansion and higher volume growth at 2% in Q2.
Emami has given cautiously optimistic outlook given benign raw material prices, expected pickup in rural demand and likely traction from various new launches under Zandu and international business.
Q2 saw volume growth of 2% led by robust growth in both modern trade and e-commerce channel. Emami remains positive on over-the-counter healthcare, Navratna and new launches under Boroplus.
Emami is investing for growth with-
new launches in existing categories like Boroplus, Zandu, Kesh King and new product launches in D2C,
investment in new direct-to-consumer new age businesses and modern trade,
increase in direct town coverage to 60,000 and
strengthen its healthcare portfolio with acquisition of Axiom Ayurveda (blend of fruit juice and aloe Vera).
We estimate 9.6% profit after tax compound annual growth rate over FY23-26 and value the stock at 26 times Sep-25 EPS assigning a value of Rs 564 (Rs 524 earlier). Retain 'Accumulate'.
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