Emami share rises 2% on Q4 earnings; here's what brokerages say

Share of Emami  rose 2 per cent to hit an intraday high of Rs 511.05 after the company reported over three-fold jump in its net profit to Rs 88 crore for the quarter ended March 2021. Profit in the year-ago period stood at Rs 22.75 crore.

The share opened 2 per cent higher at Rs 510.00 against the previous close of Rs 499.75. The share has gained 143 per cent in one year and risen 18 per cent since the beginning of this year.

Emami share stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200 day moving averages. Market cap of the firm rose to Rs 22,339.04 crore.

Revenue from operations grew 37 per cent to Rs 730.76 crore for the quarter ended March 2021 compared to Rs 532.68 crore in the year-ago period. Net sales from domestic business rose 44 per cent.

The company's International business grew by 28 per cent on the back of robust performance in markets of SAARC, GCC & Africa during the quarter. Brands like 7 Oils in One, Creme 21, and Kesh King performed well in the International geographies. However, The Canteen stores department (CSD) business declined by 3 per cent during the quarter.

"During the quarter, input cost pressure increased due to inflation in key commodities which led to a gross margin decline of 250 bps," the company said.

"We are very happy to have continued with our growth momentum and consistently delivered broad-based growth across brands, channels and businesses and close the fourth quarter with overall revenue growth of 37% and EBIDTA growth of 65%, despite an increase in major input costs in Q4FY21. While rural demand has sustained, urban demand is gradually picking up," said  Mohan Goenka, Director, Emami Limited.

"Our domestic business grew by 44%, International business by 28% in Q4FY21 and we continued to improve our sales and profitability quarter on quarter," he added.

CLSA has an 'outperform' call on the stock with a target at Rs 520 per share. It expects margin pressure in the near term.

"We are cutting FY22 EPS estimates by 5 per cent and keep it unchanged for FY23," the brokerage house added.

"We have reduced our earnings estimates for FY2022 by 6% and marginally by 2% for FY2023 to factor in lower sales for summer products and discretionary products in Q1FY2022," Sharekhan said.

The brokerage firm has a 'Buy' rating with a target price of Rs 570 per share.

Prabhudas Lilladher believes that robust growth across healthcare, pain management and Kesh king, the revival of Fair & handsome portfolio and success of new brands can provide upside to the estimates.

"We are cutting FY22/23 EPS estimates by 4.2/4.8% on the back of COVID-led fall in demand in H1 FY22, raw material inflation, and increased tax rate," it added.

The brokerage house has a 'Buy' rating with a target price of Rs 579 per share.