Shares of Emami, the personal care products company, hit over two-year high at Rs 619, zooming 19 per cent on the BSE in Thursday’s intra-day trade. The stock soared 18.66 per cent to hit a high of Rs 619. Today’s strong uptick in the share price came after the homegrown FMCG major reported a 3.62 per cent rise in its profit after tax (PAT), at Rs 146.75 crore, for the fourth quarter that ended on March 31, 2024. The company’s PAT for the same quarter of the previous fiscal stood at Rs 141.62 crore, as per BSE filing.
Emami’s revenue from operations for Q4 FY24 was Rs 891.24 crore, up 6.61 per cent from Rs 835.95 crore in the corresponding period last year. The company said it demonstrated resilience and achieved volume-led profit growth in the fourth quarter.
EBIDTA (Earnings before interest, taxes, depreciation, and amortisation) stood at Rs 211 crore grew by 6 per cent, the FMCG firm said. Total expenses were Rs 680.26 crore, up 7 per cent in Q4 FY24.
Its domestic business grew 8 per cent registering a volume growth of 6.4 per cent, it mentioned. “Major brands like BoroPlus, Pain Management range, Healthcare range, 7 Oils in One, The Man Company and Brillare performed strongly during the quarter,” Emami added.
Emami remains optimistic about future growth, supported by a favourable economic landscape, forecast of a normal monsoon, anticipated rural market recovery, government initiatives, and promising macroeconomic factors, all contributing to a confident outlook for sustained positive performance. It is encouraging to witness signs of market recovery with rural areas gradually bouncing back, the management said.
Management has initiated several steps (e.g., team additions, new launches, hiring consultants, marketing spends, etc.) over the last three to four years to revive volume growth; however, the desired result has not yet been achieved. However, analysts expect volume growth acceleration in FY25, driven by rural growth improvement and seasonal tailwinds.
On technical setup, the counter was trading higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The counter’s 14-day relative strength index (RSI) came at 76.47. A level below 30 is defined as oversold while a value above 70 is considered overbought.
The company’s stock has a price-to-equity (P/E) ratio of 13.38 against a price-to-book (P/B) value of 11.21. Earnings per share (EPS) stood at 45.03 with a return on equity of 83.77.
The counter saw heavy trading volume today on BSE as around 1.94 lakh shares were seen changing hands at the time of writing this story. The figure was way more than the two-week average volume of 25,000 shares. Turnover on the counter came at Rs 11.52 crore, commanding a market capitalisation (m-cap) of Rs 26,445.79 crore. There were 34,776 sell orders as against buy orders of 21,682 shares.
As of March 2024, promoters held a 54.84 per cent stake in the company.
What Analysts Say?
With the improving volume trajectory, rural recovery, and Emami’s initiatives around distribution, new launches, and marketing spending, revenue growth is expected to accelerate in FY25, Motilal Oswal Financial Services said.
The brokerage firm models 8 per cent revenue CAGR over FY24-26, primarily driven by volume growth. Ebidta’s margin is already at an elevated level (much higher than peers). MOFSL model a 27.4 per cent Ebitda margin for FY26 vs. 26.5 per cent for FY24. Emami’s core categories are niche and they have been witnessing slow user addition over the last five years. Although Emami commands a high market share in core categories, the share gain is no longer a catalyst for volume growth, the brokerage firm said. The stock is however trading above the target price of Rs 600 per share.
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