MOSL: EMAMI (Buy)-Sales and EBITDA decline as expected-International business the key drag
​Emami: Sales and EBITDA decline as expected; International business the key drag
(HMN IN, Mkt Cap USD3.8b, CMP INR1080, TP INR1250, 16% Upside, Buy)
- Emami's (HMN) 4QFY17 consolidated sales declined 4.4% YoY (est. of -2.1%) to INR5.78b. Domestic volumes fell 1.5% YoY (est. of -4%). Domestic sales grew 3% YoY, but the international business (-38% YoY) was severely affected.
- Gross margin contracted 150bp YoY (est. of -50bp) in 4QFY17, which, along with an increase in other expenses (+70bp) and employee expenses (+30bp YoY), was partly offset by lower ad spends (-240bp YoY). Thus, EBITDA declined 4.7% YoY to INR1.8b (est. of -2.9%), with the margin contracting 10bp YoY to 30.8%. PBT declined 3.6% YoY to INR1.57b (est. of INR1.61b).
- Lower-than-expected tax rate (6.9% v/s est. of 38%) meant that adjusted PAT fell 6.6% YoY to INR1.45b v/s our expectation of over 36% decline.
- International business was severely affected, led by the MENAP region. Consequently, international sales declined 38% YoY in 4QFY17.
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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