Emami, an FMCG firm, announced a 400% dividend but had a weak second quarter
- ByStartupStory | November 14, 2022
Emami Limited is a large-cap business that operates in the FMCG sector with a market value of 20,511 Cr. Emami Limited, one of the top personal and healthcare companies in India, has a great portfolio of well-known household brand names, including BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Mentho Plus Balm, Fast Relief, and Kesh King. The business also announced a 400% dividend along with its Q2 profits.
The Board of Directors in its meeting on November 11, 2022, declared an interim dividend of 400%, or Rs. 4 per fully paid equity share of Rs. 1, the firm stated in a stock exchange statement. The holding firm has a record date of November 21, 2022, to determine stockholders eligible to receive the aforementioned interim dividend.
In comparison to Q2FY22, the firm reported net sales of 807.36 crore in Q2FY23, an increase of 3.9% YoY. In comparison to the 787.12 crore reported in Q2FY22, the business reported revenue from operations of 813.75 crore in Q2FY23, reflecting a YoY rise of 3.4%. In Q2FY23, the firm reported EBITDA of 195.38 crore, a decrease of -29.5% YoY from Q2FY22’s EBITDA of 277.18 crore. In Q2FY23, the firm recorded a net profit of 184.18 crores, a decline of -0.6% YoY from the 185.27 crores reported in Q2FY22. The company’s earnings per share remained constant at 4.17.
“A considerable shortfall on our expectations and the improbability of a rapid comeback led to a drop of about 8% each in our FY23/FY24 EBITDA prediction,” the research analysts of the brokerage business Motilal Oswal stated. However, there is no significant change in EPS for both fiscal years due to the 10% tax rate guideline for FY23 and FY24 compared to its prior estimate of 17.5% and 18%. The 9.7% sales CAGR over FY20-22 for HMN was much higher than the 3% sales CAGR over FY16-20. A further re-rating might be in the works if this trajectory results in a robust and consistent double-digit sales increase.
About Emami
“We maintain our Buy rating on the stock due to the stock’s: a) affordable valuations at 21.1x FY24E EPS (23.2x including amortization); b) increase in ad-spends; and, c) low dividend yield of 1.30% and 3) extending its distribution network into rural areas. We arrive at our target price of INR 550 (valuing the business at 24x Sep ’24E EPS, at a 40% pre-amortization discount to its rivals). We continue to recommend buying,” they said.
On Friday, Emami Ltd. shares finished at $465.20 per share, up 0.043% from the previous close of $465. In contrast to the 20-Day average volume of 155,090 shares, the stock’s most recent trading session saw a total volume of 197,166 shares. The stock has decreased 10.83% YTD so far in 2022.
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