Prabhudas Lilladher's research report on Emami
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 gains in core brands and sustained traction in 7 in 1 hair oil and 5) benefits of corrective steps taken in International business. We believe that softening of Input cost pressures and 4% price increase should enable the company to maintain margins.
Outlook
We estimate 12% PAT CAGR over FY18-21 and value the stock at 33xDec20 EPS and arrive at price target of Rs524. Retain Accumulate.
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Read More First Published on Feb 12, 2019 05:10 pm
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