Emami‘s share price has been rocketing on the bourses since the company posted its earnings for the March quarter. Analysts at HDFC Securities were also impressed by the company’s performance.

The Emami Analyst: Vishal Gutka-led analyst team at HDFC Securities upgraded the stock’s rating to “add” from “reduce” raising the price target to ₹600 from ₹500.

The Emami Thesis: The brokerage said that Emami’s March quarter performance exceeded its expectations, driven by an enhanced product mix and distribution expansion initiatives. Sales of Boro Plus surged by 33% year-on-year and pain management products increased by 9% YoY, supported by an extended winter season.

Here is the table showing Q4FY24, Q4FY23, and YoY (%) for the given data:

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The analysts however pointed out that the summer product range saw muted demand with a 1% YoY increase. On the downside, the analyst noted that the male grooming segment fell by 2% YoY and Kesh King dropped by 9% YoY, marking the third consecutive quarter of disappointment for these portfolios.

The gross margin improved by approximately 265 basis points YoY to 65.8%, attributed to a better product mix, with higher contributions from Boro Plus and the healthcare range. The brokerage highlighted that the management anticipates continued marginal expansion of gross margins in FY25 due to stable input costs and slight price increases (2-2.5%).

Despite the improvement in gross margins, the EBITDA margin remained flat YoY because of a 40% YoY increase in advertising and promotional spending. For FY25, Emami’s management has projected double-digit revenue growth and moderate margin expansion.

Price Action: Emami’s share price was up 4.42% to trade at ₹638.90 shortly after market open on Friday.

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