Emami

Strong 2QFY21 performance, expect 2HFY21 to better – Emami

Update on the Indian Equity Market:

On Tuesday, Nifty closed 1.4% higher at 12,631. Within NIFTY50, BAJFINANCE (+8.9%), INDUSINDBK (+7.3%), and LT (+6.9%) were the top gainers, while TECHM (-5.7%), CIPLA (-5.4%), and HCLTECH (-5.0%) were the top losing stocks. Among the sectoral indices, FINANCIAL SERVICES (+4.1%), BANK (+3.9%), and PRIVATE BANK (+3.7%) were the top gainerswhilePHARMA (-4.3%), and IT (-3.9%) were the only losing sectors.

Strong 2QFY21 performance, expect 2HFY21 to better – Emami

Excerpts of an interview with Mr. N H Bhansali, CEO-Finance& CEO, Emami, aired on CNBC-TV19 on 9thNovember 2020
● In 2QFY21, Emami delivered 10% YoY volume growth, 11% YoY revenue growth and 33% YoY EBITDA growth.
● In 2QFY21, excluding the winter portfolio which had a weak quarter, the revenue growth was 28% YoY.
● The growth was seen across all brands, channels and geographies. Kesh King had highest ever quarterly growth, healthcare sector delivered 50%+ YoY growth in 2QFY21.
● Now winter is setting in and management expects 2HFY21 to be better. Trajectory in October 2020 was good and all brands are performing well.
● Healthcare segment, which includes chyawanprash and other immunity boosters, growth was 40% in 1QFY21 and 53% in 2QFY21.
● There is no extra inventory with the dealers now and the supply chain has settled well from the interim covid-19 disruption. So growth would continue.
● In line with the FMCG industry, Emami’s advertising expenses have now returned to pre-covid levels.
● Management expects EBITDA margin to expand from 26% in FY20 to ~30% for FY21E.

Consensus Estimate (Source: market screener website)
● The closing price of EMAMILTD was ₹ 380/- as of 10-November-2020. It traded at 38x/ 31x/ 26x the consensus EPS estimate of ₹ 10.1/12.1/14.5 for FY21E/ FY22E/ FY23E respectively.
● The consensus target price of ₹ 391/- implies a PE multiple of 27x on FY23E EPS of ₹14.5/-.

Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”

Healthcare and hygiene portfolio has grown by 29% in Q1 – Emami

Update on the Indian Equity Market:
On Tuesday, NIFTY closed in the green at 11,322 (+0.5%). Top gainers in NIFTY50 were Zee (+5.2%), JSW Steel (+3.9%), and Axis bank (+3.9%). The top losers were Shree Cement (-3.9%), Titan (-3.6%), and UPL (-2.3%). The top sectoral gainers were MEDIA (+1.9%), PVT BANK (+1.7%) and METAL (+1.6%) and sectoral losers were PHARMA (-1.4%), IT (-0.5%), and REALTY (-0.5%).

Excerpts of an interview with Mr NH Bhansali, CEO, Emami with ET now dated 10th August 2020:

● April was impacted badly. They progressed well in May and in June they grew in single digit. The July trajectory is also good. They grew in double digits in July and they expect the growth to resume.
● On the international front also, while they have declined in the first quarter but in the second quarter, they expect to improve on the international front as well. They expect moderate growth in 2QFY21.
● The healthcare and hygiene portfolio has grown by 29% in Q1FY21 and it contributed around 43% of the turnover in the first quarter. While the summer brands and other brands including the male grooming all de-grew by 44%.
● This pulled down the overall growth which contributed around 57%. Going forward they expect good growth from the healthcare and hygiene products kind of sanitizers.
● new launches there in the healthcare and sanitizers like Boroplus Sanitizer, soaps, aloe vera gel, zandu immunity range, chyawanprash they all contributed around 5% of the turnover.
● Navratna and others were declining in the first quarter but now in June-July they have started recovering. Kesh King range was declining in April-May but cumulatively in June, the Kesh King range has been able to wipe out its losses.
● It is stable now, it has maintained its growth and they expect now the growth to come in in the second quarter. Summer brands have also now started picking up while the decline earlier was higher but in June-July the decline has been lesser.
● The gross margins have reduced by 230 bps and EBITDA margins has improved by 480 bps. The gross margin has been mainly because of the benign cost and they expect this kind of margins to continue.
● On the EBITDA level, they had taken many initiatives, right from reducing on the advertisements which was not required in the April as they were completely off air in April, May and June now gradually they are resuming some of the advertisements
● They have internally targeted to improve their costs by around Rs 80-100 crore in the next 12 months and they are well on the path and they would continue to achieve it.
● They have made 12 new launches in this quarter and which were all around health and hygiene and sanitizers and all. In the times to come, they are planning to get into the home hygiene products which may include disinfectants, toilet cleaners and bathroom cleaners and other things.
● Rural demand has picked up well, in fact, it is visible in the rural areas compared to the urban but there is no significant down trading on LUPs.
● They have initiated so many things, they have done digital marketing because their focus is more on addressing the consumers digitally without physical touch so while the retail and modern trade has been impacted, and they are exploring other channels also.
● They are doing a lot many initiatives by telemarketing, digital marketing, tele-calling for taking the orders and ensuring that the supplies are done on time. In fact, the E-commerce business has more than doubled in this first quarter despite such a decline and it is continuing to grow.

Consensus Estimate: (Source: market screener and investing.com websites)

● The closing price of Emami was ₹ 337/- as of 11-August-2020. It traded at 34x/ 31x the consensus earnings estimate of ₹ 9.9/ 10.8 for FY21E/22E respectively.
● The consensus price target is ₹ 301/- which trades at 28x the earnings estimate for FY22E of ₹ 10.8/-
Disclaimer: “The views expressed are for information purposes only. The information provided herein should not be considered as investment advice or research recommendation. The users should rely on their own research and analysis and should consult their own investment advisors to determine the merit, risks, and suitability of the information provided.”