Emami Targeted at Rs 469 by Prabhudas Lilladher

Emami Faces Near-Term Challenges Amidst Healthy Demand Outlook

Emami's performance in the recent quarter was impacted by weak summer sales and unseasonal rains, resulting in a decline of approximately 3.9% in sales and 7% in volumes. The company's near-term outlook remains cautiously optimistic due to a combination of factors, including healthy demand for fiscal year 2027 and the acquisition of new brands in the beverage and basic personal care segments.

The summer demand has shown signs of improvement in April and May, but the impact of the Indian Beauty and Personal Care (IBD) sector remains a near-term concern for Emami. The company's recent acquisitions of Axiom and Incnut are expected to provide a boost to sales, but it is crucial to monitor the organic growth in these brands.

Long-Term Growth Projections

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Our research team estimates that Emami will achieve a compound annual growth rate (CAGR) of 10.8% in sales, 10% in earnings before interest, depreciation, taxes, and amortization (EBIDTA), and 5.5% in earnings per share (EPS) over the period of fiscal year 2026 to 2028.

Valuation and Recommendation

We value Emami's stock at 24 times its estimated earnings per share for fiscal year 2028, with a target price of Rs469. This represents a downward revision from our previous target price of Rs484. Taking into account the company's current performance and prospects, we have revised our recommendation to "Hold."