Emami Ltd. share price target

Sector: FMCG /Mid-Cap | Earnings Update 1QFY19 Background: Emami is a FMCG company with niche focus on relatively under penetrated segments such as antiseptic cream, fairness cream, talcum powder, cooling oil, pain balm and pain reliever. Emami's power brands such as Navratna Oil, Boroplus Cream, Zandu & MenthoPlus Balm, Fair & Handsome, Boroplus Powder, Navratna Cool Talc, Fast Relief, SonaChandi & Zandu accounts for 75% of company's sales. Emami sales and cash PAT have grown at a CAGR of 11.4% and 11.3% respectively (FY1217). Geographical breakup of sales: North (29%), West (27%), South (23%) and East (21%). Export contributes ~10.4% of total revenue. Company has 3,000+ distributors,...

Consolidated revenue on like-to-like (LTL) basis grew 19% YoY, with volume growth of 16% YoY. leading to LTL sales growth of 21%. EBITDA margin a percentage of sales (-380bp YoY) and other operating expenses were lower. Wholesale channel contributed to 40% of turnover in 1QFY19; (2) Management is confident of double-digit volume growth for the full year, particularly if the winter season is favorable. Changes to the model have resulted in 2.5%/3.2% cut in FY19/FY20E EPS. Wholesale channel normalization is highly positive for HMN. Before demand and supply-side disruption due to demonetization/GST implementation, up to 1HFY17, HMN was the most consistent performer even when other players with high rural exposure had started to slow down. Problem-solving nature of a large part of its portfolio and low penetration/ room for distribution expansion in most categories means that in a steady state environment it will outperform peers. Innovation pipeline and boost growth prospects further.

Emami's revenue grew by 19%, 4% below our estimate, led by a weak performance of Kesh King, Male Grooming and International business. EBITDA grew by 54%, in line with our estimate due to margin expansion while Adjusted PAT of Rs704mn was 9% below...

Emami is a leading FMCG player in India, operating in certain attractive segments such as skin care and hair oil. The company is promoted by Kolkatabased...

We value Emami based on P/E of 36x on Mar-20 EPS to arrive at a TP of Rs 1,230. We maintain BUY. Emamis consolidated revenues grew by 12% on a like-like basis (in-line) driven by 9% volume growth. We were surprised with EBITDA/APAT decline of -3/-5% vs. expectation of 9/3% respectively.

Emami Ltd Q3FY18 results comment Revenue rose by 20.46% to Rs. 756.64 Cr in Q3FY18 when compared to the previous quarter

We maintain BUY. Emami disappointed us on revenue growth and EBITDA margins. Net revenue was up 6% at Rs 7.6bn. Like-to-like revenue growth was slow at 10% (6% volume growth) vs. expectation of 17%. Kesh King and Health Supplements revenue contracted by 19% and 2%, impacting domestic performance. International posted healthy 16% growth, led by favorable base. EBITDA and APAT were up 2% and 4% respectively.

Despite lower base in 3QFY17 owing to demonetisation, Emami has reported a disappointed set of numbers for 3QFY18. While its consolidated net sales grew by 6% YoY to Rs7.6bn (vs. our estimate of Rs8.1bn), net profit came in at Rs1.5bn, lower than our estimate of Rs1.6bn....

It is a great play on rural demand growth and wholesale recovery. Before the slowdown caused by extraordinary factors like demonetization, Emami had the best track record among peers on consistency of earnings growth, which we expect will make a comeback. Emami has a formidable portfolio of dominant brands, with best-in-class R&D and advertisement to support existing brands and new launches. Despite likely resumption of better-than-peers' earnings growth of 20% CAGR over FY18-21, the stock trades in line with peer multiples. Our target price of INR1655 implies a one-year upside of 23% and a two-year upside of 39%. Our bull case upside is 33% for one year and 53% for two years.

Emami Ltd is one of the leading and fastest growing personal and healthcare businesses in India, with an enviable portfolio of household brand names such as Boroplus, Navratna, Fair and Handsome, Zandu balm, Mentho Plus balm and Fast Relief. Emami has received countless accolades for its innovative and clutter-breaking products, which have carved out whole new segments from scratch in the Indian FMCG space .