Emami rating – Buy: Growth was strong across categories

General, we count on the strong income trajectory to maintain led by sustained deal with well being & hygiene. Nevertheless, the corporate’s summer time portfolio is prone to be impacted in Q1FY22 by Covid wave 2. Preserve Purchase with revised TP of Rs 610 as we roll over to Sept 2022E.

Emami’s consolidated Q4FY21 income (up 37.2% y-o-y) and PAT (up 190.8% y-o-y) surpassed our estimates, whereas Ebitda (up 65.2% y-o-y) got here under estimate. Bolstered by sturdy efficiency within the healthcare portfolio, home volumes grew 39% y-o-y on a comfortable base of -19%. Whereas two-year income CAGR is 6.9%, quantity CAGR is 6.1%. Though mentha costs are benign, spike in different uncooked supplies led to gross margin compression of 249bps y-o-y.

General, we count on the strong income trajectory to maintain led by sustained deal with well being & hygiene. Nevertheless, the corporate’s summer time portfolio is prone to be impacted in Q1FY22 by Covid wave 2. Preserve Purchase with revised TP of Rs 610 as we roll over to Sept 2022E.

Sturdy development throughout classes: Sturdy income and quantity development have been positives, as additionally sturdy efficiency in healthcare and ache administration vary. Nevertheless, 249bps y-o-y and 771bps q-o-q gross margin compression was disappointing. Q4FY21 witnessed an all-round sturdy efficiency throughout manufacturers with healthcare vary, Navratna, ache administration and seven oils in a single posting 48%, 13%, 33% and 45% development, respectively, on two-year foundation (Q4FY21 versus Q4FY19). Kesh King and BoroPlus grew strongly in This autumn, however rose mere 7% and 5%, respectively, over two years. Worldwide enterprise grew 21% on two-year foundation.

Outlook: Constructive – We count on strong income development to maintain using larger rural contribution and deal with well being & hygiene. Moreover, alleviation of the promoter stage pledging concern is an added optimistic. We retain ‘BUY/SO’ with revised TP of Rs 610 (from Rs 595) as we roll ahead to Sept 2022e. The inventory is buying and selling at 30.1x FY23e EPS.