Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

Maintain REDUCE on Emami - Miss on all fronts - HDFC Securities

Posted On: 2020-07-02 04:41:31

Mr. Varun Lohchab, Head Institutional Research & Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities.

Emami (Q4FY20 Results Review): Miss on all fronts. Maintain REDUCE
(TP Rs 207, CMP Rs 206, MCap Rs 93bn)

Emami's 4QFY20 performance was disappointing as the co registered a 17% yoy decline in consolidated revenues. Boroplus, Male Grooming and Kesh King saw sharp revenue decline of 77/42/26% yoy. 4Q performance was impacted by weak category growth (even prior to Covid-19) and lockdown. Emami continued to gain market share in most of its portfolio. Co could not react fast enough to cut costs, resulting in EBITDA contraction of 36% yoy with EBITDAM declining by 569bps yoy. Co is now focusing on strategic launches and relaunches in hygiene and healthcare to drive revenue growth. Benign commodity inflation and expected savings of Rs 500-600mn from cost saving initiatives in FY21 could see margins expand for the co. However, Emami's portfolio is discretionary in nature and we expect recovery will take slightly longer than other FMCG cos. Hence, we cut EPS estimate by 6% for FY21E/FY22E. We value Emami at 17x on FY22E EPS and arrive at a TP of Rs 207. Maintain REDUCE.

Revenue pressure across the board: Domestic revenue declined by 19% yoy (+3% in 4QFY19 and -2% in 3QFY20) yoy vs. HSIE est decline of 10% yoy. Kesh King/Boroplus/Navratna/Male Grooming/Healthcare/Pain Mgt saw revenues decline by 26/77/12/42/9/5% yoy while 7 Oils in one clocked a growth of 5% yoy. However, co saw market share gains across most of its portfolio with the exception of Male Grooming. Domestic vol decline was at 19% yoy (flat in 4QFY19 and -2% in 3QFY20) vs est of 8% dip. International biz declined by 4% yoy (+19% in 4QFY19 and +18% in 3QFY20).

Healthy GM expansion, EBITDA dip by 36%: GM expanded by 436bps yoy to 65.2% owing to benign commodity inflation (-438bps in 4QFY19 and +124bps in 3QFY20). Employee/Other expenses grew by 6/16% yoy while ASP remained flat yoy. As a result, EBITDAM declined by 569bps yoy to 18.5% (-389bps in 4QFY19 and flat in 3QFY20) vs est decline of 152bps yoy. EBITDA declined by 36% yoy (exp -15%) to Rs 985mn (est of Rs 1,320mn). Dip in other income (-16% yoy) and higher depreciation (+37% yoy) negated the benefit of lower tax and led to a decline of 34% yoy in APAT to Rs 702mn vs exp. of Rs 994mn.

Call & other takeaways: (1) Co has now returned to normal operational levels, (2) MT and Ecomm saw strong growth and co has targeted doubling the revenue share of Ecomm in FY21, (3) New launches in the hygiene space are expected to drive revenue growth in FY21 and co expects revenue mix of new launches to be ~4%, (4) Receivable days increased to 42 days vs. 29 days in FY19. NWC days increased to 36 days vs. 9 days in FY19, (5) Emami Group is expected to receive money from the stake of sale of cement company over the next 7-10 days.

Shares of EMAMI LTD. was last trading in BSE at Rs.228.2 as compared to the previous close of Rs. 221.05. The total number of shares traded during the day was 106343 in over 3999 trades.

The stock hit an intraday high of Rs. 230.75 and intraday low of 215.15. The net turnover during the day was Rs. 23875251.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Cadila Healthcare - Q1FY21 First Cut - ICICI Securities

Dwarikesh Sugar - Q1FY21 First Cut - ICICI Securities

Jyothy Lab - Q1FY21 First Cut - ICICI Securities

Avenue Supermarts - Company Update - August 2020 - ICICI Securities

Hawkins Cookers - 1QFY21 Results - Angel Broking

Maintain REDUCE on Godrej Consumers - Strong comeback in H1 - HDFC Securities

ADD on Gujarat Gas - A complete washout quarter - HDFC Securities

SELL on Vinati Organics - At an inflexion point - HDFC Securities

Expectations from the upcoming RBI Policy - HDFC Securities

AXIS Bank - 10,000 Cr QIP - Angel Broking

PI Industries - Mr. Jyoti Roy, DVP - Equity Strategist, Angel Broking Ltd.

Maintain BUY on Teamlease Services - Recovery on the cards ICICI Securities

Reiterate ADD on Tata Motors - Volatile environment - ICICI Securities

Tata Consumer Products Ltd - 1QFY21 results - Rajit Rajoriya, Equity Research Associate, Angel Broking Ltd

Maintain REDUCE On Karur Vysya Bank - Pain inevitable - HDFC Securities

Sovereign Gold Bonds - Thematic Report - ICICI Securities

Varun Beverages - Q2CY20 Result Update - ICICI Securities

Saregama India - Company Update - August 2020 - ICICI Securities

Exide Industries - Q1FY21 Result Update - ICICI Securities

Indian Oil Corporation - Q1FY21 Result Update - ICICI Securities

Maintain ADD on Indian Oil Corporation - High inventory losses drag earnings - HDFC Securities

Maintain BUY on Cholamandalam Investment & Finance - A mostly good show - HDFC Securities

Maintain ADD on BSE - Fighting its way back - HDFC Securities

Maintain ADD on Motilal Oswal Financial Services - In-line performance - HDFC Securities

Maintain BUY on Sobha - A smooth ride with few bumps - HDFC Securities

Banking Sector Credit Trends Report - Growth slows, as expected - HDFC Securities

Maintain ADD on Sun Pharma - Cost savings drive the quarterly beat - HDFC Securities

Auto Sector Performance - July'20 - Angel Broking

Sector Thematic on Indian Gas Sector - Looking beyond the pandemic - HDFC Securities

ADD on Max Financial - Lower margins despite higher protection - HDFC Securities

Maintain BUY on Mastek - Changing orbit - HDFC Securities

Mantain REDUCE On Dabur - In-line 2Q, slight beat in domestic volume - HDFC Securities

CreditAccess Grameen - Q1FY21 - YES Securities

ADD on Torrent Pharma - Resilient performance - HDFC Securities

BSE Limited - Pricing pressure remains a challenge - ICICI Securities

Kansai Nerolac Paints - Better-than-expected trajectory in decorative paints -

VA Tech Wabag - High receivables, low margins to impact earnings - ICICI Securities

CreditAccess Grameen - Customer activation trend shows resilience - ICICI Securities

Tata Chemicals - Q1FY21 Result Update - ICICI Securities

VST Industries - Q1FY21 Result Update - ICICI Securities

ADD on Navin Fluorine International - Commendable performance - HDFC Securities

Whirlpool of India - Valuations belie outlook; risk-reward unfavourable - ICICI Securities

Kansai Nerolac - Q1FY21 First Cut - ICICI Securities

Exide Industries - Q1FY21 First Cut - ICICI Securities

Monthly Auto Volumes - July, 2020 - ICICI Securities

Cholamandalam Investments and Finance Company Ltd - Q1FY21 Result Update - YES Securities

Mahindra logistics - Q1FY21 Result Update - YES Securities

Bluedart Express - Q1FY21 Result Update - YES Securities

Tata Motors - Cost improvements reassuring - ICICI Securities

Godrej Agrovet - Deflation in input prices leads to higher margin - ICICI Securities

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019