BUSINESS

After Q4 results, Emami shares increase 19% and reach a new record high; the target price is known

In intraday trading on Thursday, shares of the personal care products business Emami surged 19% on the BSE and reached a two-year high of Rs 619. The stock shot up 18.56% to a peak of Rs 619. The domestic FMCG giant announced a 3.62% increase in its profit after tax (PAT), to Rs 146.75 crore, for the fourth quarter that concluded on March 31, 2024, which sparked today’s sharp increase in the share price. According to a BSE filing, the company’s PAT for the same quarter of the previous fiscal year was Rs 141.62 crore.

During Q4 of FY24, Emami’s operating revenue was Rs 891.24 crore, a 6.61 percent increase from Rs 835.95 crore during the same quarter the previous year. The business said that throughout the fourth quarter, it showed resiliency and achieved volume-led profit growth.

The FMCG company said that its EBIDTA (earnings before interest, taxes, depreciation, and amortization) increased by 6% to Rs 211 crore. The total costs during Q4 FY24 increased by 7% to Rs 680.26 crore.

It said that its domestic business expanded by 8%, translating into a volume rise of 6.4%. “During the quarter, major brands like The Man Company, Brillare, 7 Oils in One, the Pain Management range, and the Healthcare range performed strongly,” Emami said.

Emami is confident in its projection for continued strong performance and is hopeful about its future growth due to favorable economic conditions, a normal monsoon prediction, government efforts, and encouraging macroeconomic indicators. According to the management, the increasing recovery of rural regions in the market is positive.

Over the last three to four years, management has taken a number of actions (e.g., team increases, new releases, hiring consultants, marketing expenditures, etc.) to revive volume growth; nonetheless, the intended outcome has not yet been realized. Analysts do anticipate an acceleration in volume growth in FY25, mostly due to seasonal tailwinds and improved rural growth.

The counter was trading above the 5-day, 10-, 20-, 30-, 50-, 100-, 150-, and 200-day simple moving averages (SMAs) based on technical setup. The relative strength index (RSI) for the counter after 14 days was 76.47. Oversold is defined as a level below 30, while overbought is defined as a number beyond 70.

In comparison to the price-to-book (P/B) ratio of 11.21, the company’s stock has a price-to-equity (P/E) ratio of 13.38. The company had 45.03 earnings per share (EPS) and an 83.77 return on equity.

Approximately 1.94 lakh shares were spotted moving hands at the time this piece was written, indicating that the counter had high trading activity on the BSE today. The amount was much more than the 25,000 share, two-week average volume. With a market capitalization (m-cap) of Rs 26,445.79 crore, the counter had a turnover of Rs 11.52 crore. There were 34,776 purchase orders and 21,682 sell orders for the shares.

Promoters owned 54.84 percent of the firm as of March 2024.

What do analysts say?

Revenue growth is anticipated to pick up speed in FY25 due to the increasing volume trajectory, the rural recovery, and Emami’s actions regarding distribution, new launches, and marketing expenditure, according to Motilal Oswal Financial Services.

The brokerage business predicts that volume growth will be the main driver of an 8% revenue CAGR during FY24–26. The margin for Ebidta is now high—much greater than that of her peers. In FY26, MOFSL projects an EBITDA margin of 27.4%, up from 26.5% in FY24. Over the last five years, Emami’s key categories—which are niche—have seen a sluggish influx of new users. The trading business said that even though Emami has a large market share in key categories, the share increase is no longer driving volume growth. Nonetheless, the company is already trading above the Rs 600 per share target price.

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