Emami Q2 Results Review - Volume Muted; Rural Recovery Essential: Motilal Oswal

Motilal Oswal Report

Emami Ltd. reported 6.3% sales growth in Q2 FY24 (broadly in line with our estimates), attributed to factors like poor monsoons, food inflation, and subdued demand in rural markets.

Domestic business growth at 4% YoY led by 2% volume growth, which was mainly driven by channels catering to urban markets such as modern trade and e-commerce.

The Navratna and Dermi Cool reported robust double-digit growth, while single-digit fall see in BoroPlus/Kesh King/ Male grooming due to low demand from price-sensitive consumers.

Emami's management has guided for a 200-250 basis points expansion in Ebitda margin and high- single digit sales growth in FY24.

We retain our 'Buy' rating on Emami, considering a gradual rural revival (over 50% of sales), inexpensive valuations at 28 times FY25E earnings per share, improving revenue performance, rural distribution expansion, and increased ad spending.

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