Sharekhan has given Buy recommendation for Emami with a target price of Rs. 570 in its research report issued on May 25, 2021
Sharekhan’s research report on Emami
Emami posted yet another quarter of strong performance, largely led by 39% volume growth in the domestic business (overall volume growth of 33%). However, the company witnessed a miss on margins, with OPM at 22.3% (versus expectation of 25%-27%), affected by dip in gross margins. Healthcare range grew by 45% in FY2021; Management is confident of growing it by 20%-22% in FY2022 due to likely improvment in penetration and strong traction to new launches. Increased contribution from new product launches, distribution expansion, and improved sales on channels such as e-commerce and modern trade will support overall growth in the near term.
Strong liquidity position (Rs. 350+ crore cash), improved dividend payout of 78%, and discounted valuation of ~24x to close peers make it a good pick. We maintain Buy with an unchanged PT of Rs. 570.