Brokerages Raise Target Prices on Emami

Emami's share price surged by 18% during early trading on Thursday, May 30th, reaching a 52-week high following the release of its Q4 results. The stock climbed as much as 18.66% to ₹619.00 per share on the BSE. By 9:40 am IST, Emami shares were trading 17.35% higher at ₹612.15 per share on the BSE.

On May 29, Emami reported a 3.7% increase in net profit for the fourth quarter, amounting to ₹146.8 crore, up from ₹141.6 crore in the same quarter of the previous fiscal year. The company's revenue for the quarter reached ₹891.2 crore, marking a 6.6% year-on-year rise from ₹836 crore in the corresponding period last year.

In Q4FY24, the company's revenue from operations increased by 6.6% to ₹891.24 crore, up from ₹835.95 crore year-on-year. Emami's earnings statement highlighted that the fourth-quarter profit growth was driven by an increase in volume. The domestic business experienced an 8% growth, with a volume increase of 6.4%. Additionally, the international business grew by 9% in constant currency and 8% in INR terms, mainly due to strong performance in the MENA region.

The company remains optimistic about a robust summer and potentially favorable monsoon conditions, aiming for sustainable and profitable growth driven by volume. However, it plans to be cautious with price increases for the year, anticipating price hikes of up to 2% in FY25.

Analysts, however, remain bullish on Emami shares after in-line March quarter earnings.

Emkay Global Financial Services views Emami as well-positioned for the future, anticipating a recovery in rural demand and benefiting from seasonal factors, while discretionary spending is expected to improve more slowly. The brokerage foresees a re-rating of Emami's valuation as favorable seasonal conditions take effect. It has increased its topline expectations by 2% and earnings by 3% for FY25-26E, supported by a strong summer. Emkay Global has maintained a 'Buy' rating on Emami and raised the share price target to ₹625 per share.

Domestic brokerage Nuvama Institutional Equities has raised its price target for Emami to ₹645 per share, indicating a 23% upside, while maintaining its 'Buy' recommendation. 

Goldman Sachs has also increased its target price for Emami to ₹640, up from the previous target of ₹560, while maintaining its 'Buy' rating. This adjustment reflects a 22% upside from the previous close. The brokerage highlighted that Emami's growth momentum and low valuations present a significant opportunity for strong returns. A notable positive surprise was the volume growth in the fourth quarter, driven by recovery in the rural segment and expansion in distribution.

Emami has been impacted by weak rural demand and seasonal factors over the past couple of years. However, Emkay Global now sees an improving outlook due to better seasonality and a rural rebound. The brokerage reiterated its 'Buy' rating and increased the fair value of Emami's shares to ₹625 apiece. 

Over the past year, Emami shares have increased by approximately 29%, compared to a 22% rise in the frontline index Nifty 50 during the same period. 

Emami Ltd (Emami) is a manufacturer, marketer, and seller of beauty and personal care products. Its product portfolio includes skin creams, hair care products, talcum powder, soaps, lotions, and Ayurvedic healthcare products.

Emami markets its products under various brand names, including Navratna, Mentho Plus, Zandu Balm, Zandu Sonachandi, BoroPlus, Diamond Shine, Kesh King, Fair and Handsome, 7 Oils in One, Fast Relief, HE, and Kesari Jivan.

The company operates manufacturing facilities in India and Bangladesh and sells its products both domestically and internationally. Its international markets include MENAP, SEA, SAARC, CIS, Africa, and Eastern Europe. Emami is headquartered in Kolkata, West Bengal, India.