Emami’s consolidated Q4FY21 income (up 37.2% y-o-y) and PAT (up 190.8% y-o-y) surpassed our estimates, although Ebitda (up 65.2% y-o-y) came beneath estimate. Bolstered by sturdy overall performance in the healthcare portfolio, domestic volumes grew 39% y-o-y on a soft base of -19%. While two-year income CAGR is 6.9%, volume CAGR is 6.1%. Although mentha costs are benign, spike in other raw supplies led to gross margin compression of 249bps y-o-y.
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- Maintain ‘buy’ on Emami: Edelweiss
Overall, we anticipate the robust income trajectory to sustain led by sustained focus on wellness & hygiene. However, the company’s summer season portfolio is probably to be impacted in Q1FY22 by Covid wave 2. Maintain Buy with revised TP of Rs 610 as we roll more than to Sept 2022E.
Strong development across categories: Robust income and volume development had been positives, as also sturdy overall performance in healthcare and discomfort management variety. However, 249bps y-o-y and 771bps q-o-q gross margin compression was disappointing. Q4FY21 witnessed an all-round sturdy overall performance across brands with healthcare variety, Navratna, discomfort management and 7 oils in one posting 48%, 13%, 33% and 45% development, respectively, on two-year basis (Q4FY21 versus Q4FY19). Kesh King and BoroPlus grew strongly in Q4, but rose mere 7% and 5%, respectively, more than two years. International business enterprise grew 21% on two-year basis.
Outlook: Positive – We anticipate robust income development to sustain riding greater rural contribution and focus on wellness & hygiene. Furthermore, alleviation of the promoter level pledging concern is an added positive. We retain ‘BUY/SO’ with revised TP of Rs 610 (from Rs 595) as we roll forward to Sept 2022e. The stock is trading at 30.1x FY23e EPS.