EMAMILTD - Emami Ltd Share Price

Emami Limited's management expressed a positive outlook during the Q3 FY26 earnings conference call, indicating confidence in future growth prospects. The company achieved a consolidated net sales increase of 11%, reaching INR 1,152 crores, with a notable 9% volume growth in its domestic business. Key brand performances included BoroPlus, which rose by 16%, Kesh King by 10%, and Pain Management by 8%.

Management highlighted major initiatives and strategic points that will drive future performance:

1. Double-digit Growth Target: The company aims for all brands to achieve close to double-digit growth, facilitated by a reduction in GST rates to 5%, expected to encourage new user additions and increased penetration.

2. Rural Market Focus: Given improvements in rural demand, especially with smaller SKUs like sachets, the management is optimistic about capitalizing on this market segment for growth.

3. Digital Strategy: Digital advertising now accounts for 50% of overall media spend, aiding sharper targeting of young consumers and contributing to the success of digital brands, which grew by 31% year-over-year.

4. International Expansion: Revenue from international markets increased by 9%, with double-digit growth observed in key products. The management plans to continue focusing on expanding in the SAARC and CIS regions.

5. Financial Highlights: EBITDA for Q3 stood at INR 384 crores, with margins improving to 33.4%. Profit after tax grew by 15% to INR 319 crores.

6. Dividend Declaration: The Board declared a second interim dividend of 600%, amounting to INR 6 per share, reflecting the company's strong performance and commitment to shareholders.

These initiatives collectively demonstrate Emami's strategic approach towards achieving sustained growth while adapting to market dynamics and consumer trends.

1. Question: From here on, Mohan ji, how do we build for growth as we move towards FY '27? What categories could benefit?

Answer: Our goal is always double-digit growth. Given our brands' current penetration is low, and with GST now at 5%, we're optimistic about achieving double-digit growth. Seasonal brands will play a role, but we expect all categories to grow. The focus will be on targeting new consumers through digital channels, particularly youth, and we anticipate a revival in rural markets, aiming for brands previously growing at 4-5% to achieve 8-9% growth in the near term.

2. Question: Could you highlight how the initial response has been to new products in the Smart and Handsome range?

Answer: The test market for Smart and Handsome has shown positive responses primarily through digital channels. We're learning from this launch and planning for a national rollout in the second half of the year. Initial feedback suggests strong demand, and we believe the strategy will resonate once we expand further beyond the test markets.

3. Question: How are demand trends shaping in rural vs. urban markets, and which categories have seen a pickup post-GST?

Answer: Both rural and urban markets are showing promise. Most winter brands have recorded growth, and we expect the summer season to contribute to this too. We're gearing up to load summer products soon. Our focus is now on smaller SKUs, and we anticipate significant growth from rural areas, particularly for products aimed at everyday use.

4. Question: What percentage of your portfolio has seen a grammage increase due to GST cuts, and how might that impact future volume?

Answer: Approximately 20% of our portfolio saw a grammage increase due to the GST cuts. We expect this volume growth to become more pronounced in Q4, as adjustments in our pricing strategy continue to stabilize in the upcoming quarter.

5. Question: What are the expected tax rates following the recent budget amendments?

Answer: Our expected tax rate is now 25% for the standalone entity due to recent budget amendments, down from 35%. We will utilize MAT credits for the next 5-6 years, which may help bring the effective tax rate lower. The overall consolidated entity's rate should be around 20% due to factors from international subsidiaries.

6. Question: How do we assess the trade inventories now that the GST transition has completed?

Answer: Our trade inventories have normalized following the GST transition. We're currently in a good position with low excess inventories, allowing us to move forward without concern for significant stock issues as we head into the next quarter.

7. Question: What implications do you see from the NREGA scheme's reduced outlay concerning rural demand?

Answer: Our product penetration in rural areas is not heavily influenced by government schemes like NREGA. Seasonal demand remains a priority; if the season aligns with consumer needs, we believe we can achieve an 8-10% growth rate in rural markets, regardless of external funding schemes.

8. Question: Can you quantify the growth figures for rural demand this quarter and its contribution to overall revenue?

Answer: While we await Nielsen data, we estimate double-digit growth for rural markets this quarter. Rural demand represents about 48-52% of our consolidated revenue, indicating its substantial role in our overall sales.

9. Question: What was the blended portfolio price decrease for consumers post-GST cuts?

Answer: We estimate an effective price decrease of around 8% at a portfolio level due to the GST cuts affecting approximately 80-90% of our products, enhancing overall affordability for our consumer base.