MOSL: EMAMI (Buy)-Seasonality affects 1QFY19 performance; outlook positive
Emami: Seasonality affects 1QFY19 performance; outlook positive
(HMN IN, Mkt Cap USD3.7b, CMP INR566, TP INR665, 17% Upside, Buy)
- Consolidated reported net sales grew 16.2% YoY to INR6.2b (our estimate: INR6.7b). Consolidated revenue on like-to-like (LTL) basis grew 19% YoY, with volume growth of 16% YoY. Domestic (86% of sales) volumes grew 18% YoY, leading to LTL sales growth of 21%.
- Gross margin expanded 10bp YoY to 66.3% in 1QFY19. EBITDA margin expanded 490bp YoY to 20.1% (our estimate: 21.1%), as ad spends declined as a percentage of sales (-380bp YoY) and other operating expenses were lower.
- Consolidated EBITDA grew 54% YoY to INR1.2b (our estimate: INR1.4b). Consolidated PAT before amortization grew 45.3% YoY to INR879m (our estimate: INR1.1b).
- Concall highlights: (1) Wholesale channel contributed to 40% of turnover in 1QFY19; (2) Management is confident of double-digit volume growth for the full year, particularly if the winter season is favorable.
Emami markets personal and health care products. Co.'s brands and products include: Boroplus - antiseptic cream; Navratna - cool oil; Zandu Balm for relief from headaches, backache and cold; Fair and Handsome - cream for men; Mento plus balm for relief of headaches; Fast Relief - pain relief ointment; Zandu Sona Chandi - for immunity; Kesari Jivan - health supplement; Vasocare - herbal skin jelly; Zandu healthcare offers products from healthcare to lifestyle; 7 Oils in One - damage control hair oil and HE - deodorants. Co.'s subsidiaries are engaged in personal and healthcare, newsprint, ball pen tips manufacturing, retail, pharmacy, art, edible oils, healthcare, cement and bio diesel.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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