Emami stock upgraded to ‘buy’, target price raised; Citi says company to gain from demand recovery

Citi has upgraded its rating to “buy” Emami and adjusted its price target to Rs 600 from Rs 455. This is a 32% increase from the target price.
Citi expects Emami to benefit from investments for its long-term strategic initiatives. The brokerage believes that Emami is well-positioned to benefit from any rebound in the demand trend.
Citi also expects the company’s profit margin to increase thanks to moderate input costs. Emami management forecasts EBITDA margin to grow between 200 and 250 basis points in FY24 and forecasts gross margin to improve. During the April-June quarter, a favorable raw material price trend contributed to the expansion of Emami’s gross margin.

Emami management remains optimistic about the future development of rural demand, thanks to falling inflation and a near-normal monsoon. They are expected to grow for the remainder of fiscal 24 thanks to a normal winter. Emami’s D2C channel grew 27% in the April-June quarter and is expected to contribute 4-5% to FY24 revenue, management said on a conference call about the results. results in the first quarter of fiscal year 24. During the April-June quarter, Emami’s net profit increased 87% YoY (YoY) to Rs 137 crore. Revenue increased 6% year-on-year to Rs 826 crore during the same period.
Shares were up 1.64% at Rs 533.15 as of 10:17 am on the National Stock Exchange.