Target: ₹657

CMP: ₹503.25

Our recent interaction with Emami management reiterated its confidence in driving growth across domestic and international markets.

The revived strategy would focus on: expanding rural distribution through Project Khoj (50k villages by Mar’23); Project Serius – efficiency improvement through beat optimization in urban markets; drive healthcare through medico marketing, doctor coverage, NPD, and feet on street; and aim for 16 per cent+ growth in the international business as restructuring of distributors/ partners completed.

Further company would scout for M & A to strengthen its core brand offering and invest in differentiated high growth D2C companies. Moreover, the management is committed to cut its pledge further by divesting non-core assets of group companies.

We believe clear focus on improving rural coverage has resulted in continued revenue momentum. Further efficiency improvement in urban markets could lift sales. With professional management (structure) and a result-oriented strategy in place, Emami could surpass growth projections and warrant a re-rating.

We retain our Buy rating with a DCF-based TP Price of ₹657 (implied 29.8x FY24 EPS).

Key risks – prolonged Covid-19 wave in rural India, erratic seasonality.

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