Emami Q1 Results Review - Strong Rural Sales, Heatwave Lift The Volumes: Centrum

Centrum Broking Report

Emami Ltd.’s Q1 FY25 print was in line; consolidated revenue/Ebitda/profit after tax grew 9.7%/13.9%/ 10.1% YoY. Domestic revenues surged by 10%, led by 8.7% volume growth, yet international business saw 11.0% growth (constant currency). Management alluded despite challenges in rural company’s enhanced distribution/village coverage helped to capture good growth around extreme heatwave in the north. Higher spends on brand building resulted in volumeled growth reflecting rural growth continue to outpace urban in Q1.

Navratna/Dermicool grew 27% followed by healthcare at 11%, while pain management declined by 7%. Boroplus range grew 4%, while Kesh king/Male grooming declined by 15%/5%. Sales for D2C brands TMC and Brillare (~6% of sales) grew 23% YoY. Modern trade/ecom and CSD channels continued to post strong growth, while GT saw good recovery.

Gross margin inched up to 67.7% (+226bp) aided by lower raw material/PM prices. Despite higher ad-spends (+21.0%), and employee/other expenses +9.5%/+5.2%, Ebitda margins settled at 23.9% (+88bp).

Management guided for HSD growth in domestic business. With strong rural recovery we tweak earnings and retain Buy with a revised DCF-based target price Rs 826 (implying 28.5 times average of FY26E/FY27E earnings per share).

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