Company Name: Emami Ltd

Date: 30-12-2024

Sector and Industry (As per AMFI Classification) Personal Care

CMP Rs.592

No of Shares O/s 43.65cr

M Cap Rs.25,889 cr

Cash Rs. 266cr

Promoter holding 54.84%

Company Profile:

Emami is engaged in manufacturing & marketing of personal care & healthcare products with an
enviable portfolio of household brand names such as BoroPlus, Navratna, Fair and Handsome, Zandu
Balm, Kesh King, Zandu Pancharishta, Mentho Plus Balm and others.

Emami is one of the leading companies in the personal and healthcare segment with leadership in
the niche Ayurvedic segment. The Company has a portfolio of 450+ products based on ayurvedic
formulations.

The Company offers a consumer portfolio of 8 brands and 13 sub-brands.

Navratna: Cool Oils and Cool Talc. #1 market leader in its category, Endorsed by Salman Khan &
Varun Dhavan.
Zandu: Pain Balms & Healthcare products in OTC, largest pain balm brand in India, Endorsed by Sonu
Sood & The Great Khali.
Boro Plus: Antiseptic Creams & Lotions etc., No.1 Antiseptic Cream, Endorsed by Akshay Kumar,
Ayushmann Khurrana & Nushrratt Bharuccha.
Kesh King: Medicinal Oils, Shampoos etc., India's no. 1 Hairfall Expert, Endorsed by Shilpa Shetty &
Ali Fazal.
Fair & Handsome: Creams & Face wash for men, first brand to revolutionize men’s grooming
segment in India, Endorsed by Salman Khan
Emami Mentho plus balm: Pain Balm, Endorsed by Amitabh Bachchan, Ajay Devgn & Divyendu
Sharma
Emami 7 in one oil: Light Hair Oil
Dermi cool: Prickly Heat and Cool Talc, Acquired in March 2022 from Reckitt Benckiser for ₹432
crore.
Investment Argument

• High Single digit growth for the whole year expected vs company still guiding of double digit
growth. Kesh King has suffered in Q2 and grew 9% vs 15% in Q1 and hence faced challenges due to
startups and customers trying new oils. They have hired BCG to look for strategy in this segment but
it is a long journey.

• Boroplus expected to give Double digit growth in winter , at least 7-8% if bad winters as well (2% in
2QFY25). Due to delayed winters Q3 should be subdued. Good traction seen in North. (Overall ~45%
Winter portfolio of Emami).

• Quick comm is growing 2x , but GT is the strength for Emami till now. Entering supermarkets etc to
grow GT market. Trying tough to retail rural demand however they need to expand in Quick
commerce to grow in urban. MT and E comm is 26% pprox.. and balance is GT.

• Guidance by Management – Bangladesh market should grow in 3Q , Man Company should grow
3Q , male grooming should grow significantly in 3Q or 4Q + good winter should contribute 2-3%
more. Overall 7-8% should be the growth in 3Q. EBITDA margin should remain in range of 26-28%.

Key Risks

 Highly Winter led portfolio (~50%) , any shift in weather conditions can put pressure on
overall performance and margins.
 Overall Consumer demand weakness can tamper the growth.
 High RM inflation can create pressure on margins.

Outlook and Valuation

Revenue/EBITDA/PAT CAGRs of 8/11/12 (%) over FY24–26E. Initiate BUY with a DCF-based revised
TP of INR 680. At target price, the stock is likely to trade at 29x P/E multiple Mar’26E.

Key Financial Tables

Abridged Financial Statements

Rs. mn FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY28E
Profit & Loss
Revenue 28,805 31,872 34,057 35,781 39,146 42,789 47,087 51,816
Gross profit 19,513 21,142 22,044 24,176 28,127 29,225 32,160 35,494
EBITDA 8,831 9,524 8,628 9,495 12,142 11,737 13,020 14,413
Depreciation 991 942 974 927 953 1,005 1,054 1,132
EBIT 7,840 8,582 7,654 8,568 11,188 10,731 11,965 13,281
Other Income 703 953 689 468 532 922 1,140 1,489
Interest expense 133 51 74 100 103 86 82 77
Exceptional items -2679 -2458 -1499 -991 -1000 -1000 0 0
PBT 5,731 7,026 6,771 7,946 10,617 10,567 13,023 14,693
Reported PAT (after minority interest) 4,547 8,390 6,396 7,235 9,712 9,456 11,400 12,861
Adj PAT 6,692 9,361 7,801 8,143 10,632 10,356 11,400 12,861
EPS (Rs.) 15.1 21.2 17.7 18.7 24.4 23.7 26.1 29.5
Abridged Financial Statements
Rs. mn FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY28E
Balance Sheet
Net Worth 17,618 20,743 23,128 24,577 30,567 35,712 41,935 48,754
Deferred Tax 42 75 134 109 109 109 109 109
Total debt 1,638 2,885 974 1,008 858 858 858 858
Other liabilities and provisions 427 431 438 300 300 300 300 300
Total Networth and liabilities 19,724 24,134 24,674 25,994 31,833 36,979 43,202 50,021
Gross Fixed assets 11,583 12,148 12,327 11,419 12,414 13,367 14,372 15,426
Net fixed assets 7,673 7,398 6,835 6,331 6,372 6,320 6,272 6,193
Capital work-in-progress 58 17 58 67 0 0 0 0
Intangible Assets 3,651 6,055 5,625 4,813 3,813 2,813 2,813 2,813
Investments 2,553 3,027 2,934 4,415 5,915 7,415 8,915 10,415
Cash and bank balances 3,604 1,160 1,848 2,014 7,034 11,358 15,688 20,600
Loans & advances and other assets 882 3,746 3,914 4,598 4,598 4,598 4,598 4,598
Net working capital 1,302 2,732 3,463 3,755 4,100 4,474 4,915 5,400
Total assets 19,724 24,134 24,674 25,994 31,833 36,979 43,202 50,021
Capital Employed 19,255 23,627 24,102 25,585 31,425 36,570 42,793 49,612
Invested Capital (CE - cash - CWIP) 13,040 19,423 19,263 19,089 18,475 17,797 18,189 18,596
Net debt -4,519 -1,302 -3,807 -5,421 -12,091 -17,915 -23,746 -30,157

Abridged Financial Statements

Rs. mn FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY28E
Cash Flows
Cash flows from Operations (Pre-tax) 10,080 7,865 8,659 9,253 11,796 11,363 12,579 13,928
Cash flows from Operations (post-tax) 9,215 6,439 7,489 10,716 10,947 10,306 11,016 12,165
Capex 337 4,836 405 406 927 953 1,005 1,054
Free cashflows 8,878 1,603 7,084 10,310 10,020 9,353 10,010 11,111
Free cashflows (post interest costs) 8,746 1,558 7,024 10,211 9,917 9,267 9,929 11,033
Cash flows from Investing -2,270 -2,349 -1,128 -2,054 -1,895 -1,532 -1,366 -1,065
Cash flows from Financing -6,882 -4,021 -6,076 -5,630 -4,031 -4,451 -5,320 -6,188
Total cash & liquid investments 4,493 1,555 2,981 3,624 10,145 15,968 21,799 28,210

FY21 FY22 FY23 FY24 FY25E FY26E FY27E FY28E

Growth ratios
Revenue 8% 11% 7% 5% 9% 9% 10% 10%
EBITDA 28% 8% -9% 10% 28% -3% 11% 11%
Adj PAT 28% 40% -17% 4% 31% -3% 10% 13%
Margin ratios
Gross 67.7% 66.3% 64.7% 67.6% 71.9% 68.3% 68.3% 68.5%
EBITDA 30.7% 29.9% 25.3% 26.5% 31.0% 27.4% 27.7% 27.8%
Adj PAT 23.2% 29.4% 22.9% 22.8% 27.2% 24.2% 24.2% 24.8%
Performance ratios
Pre-tax OCF/EBITDA 114% 83% 100% 97% 97% 97% 97% 97%
OCF/IC (%) 71% 33% 39% 56% 59% 58% 61% 65%
RoE (%) 38% 45% 34% 33% 35% 29% 27% 27%
RoCE (%) 35% 48% 32% 32% 34% 28% 27% 26%
RoCE (Pre-tax) 44% 40% 35% 35% 37% 32% 31% 30%
RoIC (Pre-tax) 60% 44% 40% 45% 61% 60% 66% 71%
Fixed asset turnover (x) 2.49 2.62 2.76 3.13 3.15 3.20 3.28 3.36
Total asset turnover (x) 1.46 1.32 1.38 1.38 1.23 1.16 1.09 1.04
Financial stability ratios
Net Debt to Equity (x) -0.3 -0.1 -0.2 -0.2 -0.4 -0.5 -0.6 -0.6
Net Debt to EBITDA (x) -0.5 -0.1 -0.4 -0.6 -1.0 -1.5 -1.8 -2.1
Interest cover (x) 69.4 126.9 101.3 107.4 106.7 120.1 135.1 157.5
Inventory days 38.1 41.0 35.2 33.0 33.0 33.0 33.0 33.0
Working capital days 23.0 30.9 35.0 37.0 37.0 37.0 37.0 37.0