Emami’s Promoter Pledge to be Reduced to 15% by FY2024-end

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Emami’s promoters have received the required approvals to sell their stake in AMRI Hospitals. This will help to reduce the promoters’ pledge in Emami to 15% by the end of FY2024. The company is also looking to sell other assets to further reduce the promoters’ pledge to low single-digit levels by H1FY2025.

Emami is expected to achieve high single-digit revenue growth in FY2024. If the winter season is strong, revenue growth could be in the range of 10-12%. EBITDA margin is expected to expand by 200-250 basis points (bps) year-on-year.

The company’s focus is on achieving revenue growth of 12-14% by expanding its reach in the rural market, scaling up its acquired and new ventures (including The Man Company), and growing its international business at a strong double-digit pace. EBITDA margin is expected to remain in the range of 27-28%.

We reiterate our Buy rating on Emami with a revised target price of Rs. 655. The discounted valuation of 27x/23x its FY2024E/FY2025E earnings per share (EPS), the reduction in promoters’ pledge, and the improving growth prospects make it a good pick in the mid-cap FMCG space.

In summary, Emami is a well-managed company with a strong track record of growth. The recent approvals for the sale of AMRI Hospitals will help to reduce the promoters’ pledge and improve the company’s financial flexibility. We expect Emami to continue to grow at a healthy pace in the coming years


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