Khambatta Securities has given Buy recommendation for Emami with a target price of Rs. 601 in its research report issued on May 18, 2022

Khambatta Securities’ research report on Emami

During 4Q FY22, the FMCG sector was affected by rising inflation, high raw material costs, and, to a certain extent, by the Omicron wave of Covid-19, impacting both volume growth and margins. Going forward, the near-tomedium term growth outlook looks positive for Emami, given the hot summer and healthy traction in the company’s summer portfolio, strong growth momentum in modern channels, and expected improvement in rural consumer sentiment. The company’s acquisition of leading prickly heat/cool talc brand ‘Dermicool’ in March 2022 will add weight to its summer portfolio. We expect growth to accelerate by ~1-1.5 percentage points in FY23, primarily driven by improved rural consumer confidence and the abatement of the Covid pandemic. Operating margins are likely to witness some pressure due to raw material cost inflation. We have adjusted our forecasts based on the latest data-points and our updated outlook. The Emami stock witnessed robust appreciation, followed by recent corrections to stand at 19% higher since we initiated coverage on the company with a BUY rating on 23 September 2020.


The stock is currently trading at an attractive valuation of under 25x FY24E. We maintain a BUY rating on Emami with a price target of Rs 601 (reduced from Rs 657) based on P/E of 34x FY24E EPS, informing a 37% upside from current levels.

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