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Emami bets on winter, but inflation may bite

By · Published by Everything Blog

In short

Emami achieved a 36% jump in second-quarter consolidated revenue to Rs 1,088 crore, aided by a 49% surge in its domestic division, while net profit dropped 3% to Rs 144 crore because of tax normalization. Operational hurdles spanned geopolitical conflicts in West Asia, flooding in Nepal, deficient local rainfall, and escalating raw material expenses. To safeguard profitability against these input pressures, the company lifted prices by 4-5% across its portfolio during the fiscal year's first half.

Key points

  • Emami raised retail prices by 4-5% in the first half to counter high raw material inflati…: Emami raised retail prices by 4-5% in the first half to counter high raw material inflation and maintain margins.
  • Management expects revenue from newer-age brands and strategic acquisitions to surpass Rs…: Management expects revenue from newer-age brands and strategic acquisitions to surpass Rs 800 crore for the fiscal year.
  • Future demand sustainability remains closely tied to whether widespread commodity inflati…: Future demand sustainability remains closely tied to whether widespread commodity inflation can be kept under control.

Sources checked by our analysis pipeline: 1

Talking to ET after announcing the company's quarterly results, Agarwal said demand could strengthen further if inflation remains under control. While rising input costs have necessitated product price hikes, the company has begun seeing encouraging signs in the winter portfolio, with trade sales picking up.

“Rural demand is consistent. If the monsoon had been normal, our results in the second quarter would have been even better. Right now, all signals on the geopolitical front are also positive, and the only factor to monitor is inflation. We expect to sustain the growth momentum in the second half of the fiscal,” Agarwal said.

Emami, the maker of BoroPlus and Zandu Balm, on Thursday reported a 36% year-on-year increase in consolidated revenue to Rs 1,088 crore for the second quarter ended September. Revenue from its domestic business grew 49%, driven by volume growth of 43%.

However, consolidated net profit declined 3% to Rs 144 crore due to the normalisation of the effective tax rate following the phase-out of fiscal incentives. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 25% to Rs 222…

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