Emami under pressure on Q2 results; Should you buy, sell or hold the stocks?

financialexpress.com:

Emami’s share price climbed 5% to Rs 545.25; however, it retreated 0.73% to Rs 515 a day after the company posted consolidated net profit for the second quarter of FY24 at Rs 178.50 crore, down 3.1% as compared to Rs 184.18 crore during the same period last year. It posted revenue from operations at Rs 864.87 crore, up 6.3% compared to Rs 813.75 crore during the second quarter of FY23. “The company demonstrated remarkable resilience in the second quarter and half-year ending on September 30th 2023, overcoming challenges such as poor monsoons, food inflation, and subdued demand in rural markets,” Emami said.

Emami’s stock price has gained 0.50% in the last five days, 1.43% in the last one month, 35.44% in the last six months and nearly 20% year to date.

“Emami’s 2Q earnings beat our modest estimates, both on topline and margins. India volumes grew 2% YoY, broadly in-line with the sector peers. Int’l business continues to deliver double-digit growth. EBITDA margin sharply expanded YoY. Mgmt. remains hopeful on an improvement in rural demand, with even higher confidence on margins. We retain our EPS est. Roll-over to Sep-25 and retain ‘Buy’ with a slightly higher Target Price of Rs 600 (vs. Rs 560 earlier). Sustained pick-up in vol. growth will be critical for stock performance, in our view.”

“We increase our FY24E/FY25E EPS estimates by 3.6%/2.1% following higher than expected gross margin expansion and higher volume growth at 2% in 2Q. Emami is investing for growth with 1) new launches in existing categories like Boroplus, Zandu, Kesh King and new product launches in D2C 2) investment in new D2C new age businesses & Modern Trade 3) increase in direct town coverage to 60k and 4) strengthen its healthcare portfolio with