Buy Emami; target of Rs 575: Khambatta Securities

Khambatta Securities is bullish on Emami has recommended buy rating on the stock with a target price of Rs 575 in its research report dated May 26, 2021.

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

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Khambatta Securities’ research report on Emami

Emami’s FY21 results were broadly in line with our expectations with all quarters barring the first returning healthy growth in spite of the covid pandemic. Fourth quarter growth was especially strong, partly due to a lower 4Q FY20 base when the pandemic began. Healthcare and Pain Management grew the strongest with healthy performances from the BoroPlus and Kesh King ranges in FY21. New launches contributed 4% of FY21 revenues. EBITDA margins benefitted from benign raw material prices during the earlier part of the year and a lower percentage of operating expenses. This, along with lower finance cost, resulted in robust PAT growth in FY21.

Outlook

We maintain our forecasts for FY22 and FY23 at broadly unchanged levels. The Emami stock has appreciated by 36% since our intro research note dated 23 September 2020. Based on an unchanged target P/E multiple of 40.0x, our price target is Rs 575 as we maintain a BUY rating with an upside of 15% from current levels.

For all recommendations report, click here

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