Emami Ltd. share price target

Emami’s reported moderate sales growth in 3Q FY25, encountering economic and industry headwinds. Urban demand remained subdued due to rising food inflation and cash-strapped retail and wholesale trade.

Emami’s Q3FY25 numbers were soft but performance was relatively better compared to peers, as the company posted mid-single digit volume growth and OPM beat expectations.

Emami’s reported fair sales growth in 2Q FY25 as higher food inflation negatively affected discretionary consumption. Management expects demand to improve in the second half of the financial year, driven by a predicted good winter season.

With Rs8.9bn revenue (vs. the Street’s Rs9.1bn estimate) and EBITDA atRs2.5bn (Rs2.5bn), Emami’s Q2 was broadly in line with estimates.

We remain positive on Emami, given the focus on execution to drive growth (with a professional team in place), the rebound in rural growth, increased thrust on urban (26% sales from Modern trade and Ecommerce), and hopes of a better season ahead.

Emami reported 3% YoY sales growth in 2QFY25 (est. 5%). The domestic business grew 2.6% YoY, led by volume growth of 1.7% (est. 3%).

Emami’s Q2FY2025 operating performance missed the mark with domestic volume growth coming at 1.7% versus expectations of 3-4%. Consolidated OPM came in-line at 28.1%.

We hosted Emami’s management team—Mohan Goenka (Director), Manish Gupta (Head of Sales), and Rajesh Sharma (Sr VP finance and IR)—and a group of investors, as part of our Emkay Connect initiative.

Emami’s healthy sales growth during the quarter is attributable to robust domestic volume growth and a hot summer. Demand witnessed a sequential improvement in the 1Q FY25, particularly in rural markets, as the company also launched 8 new products.

Emami reported 10% YoY sales growth in 1QFY25 (est. 8%). The domestic business grew 10% YoY, led by 9% volume growth. There was a sequential improvement in demand in the rural market.

Emami’s Q4FY2024 operating performance was good as compared to the earlier quarter with a 6.4% volume growth; revenue grew by 7%; EBIDTA margin stood stable at 23.7%.

Emami reported robust double-digit growth (+16% YoY) in non-summer portfolio, while summer portfolio was impacted by unseasonal rains in key markets. Growth was driven by the return of double-digit growth in pain management and healthcare range which is encouraging. Scale-up of Dermicool (+9% YoY) is also progressing well with the launch of new campaign and LUP SKUs to induce consumer trials.

Emami reported a patchy revenue performance with (consol.) adjusted revenue (explained below) decline of ~2% YoY. Weak performance was due to subdued rural demand (some green shoots in current quarter) and unseasonal rains.

Emami reported a patchy revenue performance with (consol.) revenue growth of 1%; adjusted revenue growth YoY (explained below) declined ~4% YoY. Weak performance was due to subdued rural demand (no signs of revival; Jan continues to be weak).