Emami pines for rural recovery
₹1,150 crore for Emami. “With this proceeding, Emami is looking to reduce the pledge position to 13%. With further land asset monetization, the endeavor is to reduce the pledge to about 10% by Q3FY24," wrote Nitin Gupta, analyst at Emkay in a report on 25 September.
Meanwhile, on the margin front, Emami is better placed versus other FMCG companies aided by the discretionary nature of its portfolio and relatively lower competitive pressure. The company expects Ebitda margin to improve by 200-250 basis points in FY24 on a year-on-year basis. In FY23, Emami’s Ebitda margin stood at 25.3%.
Ebitda is earnings before interest, tax, depreciation, and amortization. Be that as it may, investors’ attention would also be on revenue growth, which has been in the range of 1-9% in the past four quarters. However, new age channels including modern trade and e-commerce have been growing faster.
In Q1, modern trade and e-commerce contribution to domestic business was 19.4%. To be sure, even after the recent sharp appreciation in the stock price, Emami’s valuations seem reasonable. Currently, the shares trade at 25.4 times its estimated earnings for FY25, according to Bloomberg data.
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