Emami Q2 Results Review – Pressure Across Categories: Dolat Capital

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Emami Ltd.’s operational performance was below our estimate, but adjusted profit after tax was ahead due to lower tax incidence and decline in depreciation expenses.

Domestic business grew 1% (8% three-year compound annual growth rate) while international business reported 17% YoY growth. Core business volume growth during the quarter was at 1.2%.

Excluding Dermicool business, modern trade grew by 28% (8.7% contribution) while e-commerce jumped 55% YoY (7.8% contribution) in Q2.

Though Emami’s operational performance during the quarter was below our estimate, we have increased our FY23E earnings per share estimates at Rs 14.9 to factor in lower tax rate in H2 FY23E.

Barring near term cost lead headwinds, long term growth prospects continue to remain intact.

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