Emami Ltd. share price target

We value Emami at 32x on Dec-20 EPS, with TP of Rs 543 (earlier Rs 561). Maintain BUY. Emamis 3Q performance was weaker than expected owing to underperformance in winter portfolio (45% revenue mix) and gross margin pressure. Net revenues grew by 7% (exp. 11%) with 3.5% volume growth (exp. 8%). EBITDA/APAT grew by 1/-2% (exp 8/8%).

We cut our EPS estimate of FY19-21 by 4.7-5.7% on the back of only 3.5% volume growth in the biggest quarter due to delayed winters (45% of sales from winter portfolio). Emami has witnessed some uptick in January sales, however, we believe that any extension of winter is likely to hamper the summer portfolio sales which usually goes in trade from mid-Feb. Emami has given cautiously optimistic outlook for coming quarters led by 1) uptick in rural economy in the run up to elections 2) recovery in wholesale channel 3) good traction in Kesh King post its re-launch in 2Q 4) Strong market share...

31 January 2019 business grew 7% (3.5% volume growth) while International business grew 18% YoY. EBITDA was flattish at INR2.67b (our est. for exceptional item relating to VRS compensation of INR98m) was down 0.8% YoY to INR2.1b (our est. Sales, EBITDA and PAT before amortization growth stood at 7.

Incorporated in 1974, Emami Limited is one of the leading and fastest growing personal and healthcare companies in India, with an enviable portfolio of over 300 household products.

Emami Ltd Q2FY19 results Comment Revenue increased by 2.22% to Rs. 628.02 Cr in Q2FY19 when compared to the previous quarter. Also, it grew by 0.01% when compared with Q2FY18.

We value Emami based on P/E of 32x on Sep-20 EPS to arrive at a TP of Rs 547 (earlier Rs 561). We maintain BUY. Emami reported a weak but in-line quarter marked with seasonality, trade challenges and a heavy base (revenue/EBITDA growth of 14/15% in 2QFY18) of GST restocking. Emamis discretionary portfolio is yet to see a pick-up in consumption post demonet. Revenues were flat (exp. -2%) with 4% volume contraction (exp. -2%). EBITDA/APAT grew by -6/-12% (exp. -13/-13%).

Revenue fell by 0.42% to Rs. 614.38 Cr in Q1FY19 when compared to the previous quarter. Emami Ltd Q1FY19 results Comment

We value Emami based on P/E of 36x on Jun-20 EPS to arrive at a TP of Rs 634 (earlier Rs 627). We maintain BUY. Emami reported an in-line quarter marked with partial recovery, supported by an extremely favourable base (-18% in 1QFY18). Consolidated revenue grew by 19% (exp. 17%) driven by 16% volume growth (in-line). EBITDA/APAT grew by 54/42% (exp. 54/45%).