Emami Q1 Review – Subdued Result Trend Continues: Motilal Oswal

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Emami Ltd.’s overall volume growth in Q1 FY23 stood at 9.6% YoY, while it was 2.4% ex-Dermicool (merged from this quarter). The base of healthcare business along with pain management weakened (versus good growth in other segments) in Q1.

However, it is likely to be less challenging in subsequent quarters. According to the management, material cost pressures are likely to persist for some more time.

It is heartening, though, that Emami is investing on growth. Its ad-spends-to sales ratio is expected to increase by over 100 basis points in FY23 and investments in Project Khoj (to augment rural distribution) will also continue.

While sales growth continued to be unimpressive for a company of its size (with a five-/three-/two-year compound annual growth rate of 5.1%/5.8%/9.7%, respectively), the trend is getting relatively better. Emami’s valuations are also inexpensive.

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