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Chola Securities
Emami (Buy)
CMP: ₹1,049.95
Target: ₹1,341
Emami’s consolidated revenue grew by 8.2 per cent y-o-y & 18.3 per cent q-o-q to ₹617 crore on like to like basis (including GST/VAT & excise duty), revenue grew 12.3 per cent y-o-y aided by the volume growth of 9 per cent.
Domestic business grew 10 per cent y-o-y (volume: +8 per cent y-o-y), with rural and retail grew 15 per cent y-o-y, modern trade grew 50 per cent y-o-y (around 6 per cent of domestic revenue) and wholesale segment was flat; share of wholesale channel has reduced significantly to 39 per cent from 55 per cent in 4QFY18. International business grew by 37 per cent y-o-y led by robust performance in MENAP and SAARC market. CSD grew 1 per cent y-o-y.
Valuation: We have valued Emami at EV/Sales of 9X FY20E with a ‘buy’ rating and a target price of ₹1,341.
Risks: Sharp rise in the menthol price & crude derivatives could adversely impact the margin.
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