Buy This Largecap FMCG Stock With Rs. 550 Target Price, Global Business Grew 45%: Chola Wealth Suggests

Renowned brokerage firm Chola Wealth recommends investors to buy the stocks of Emami Ltd. The company's global business reported strong growth in sales by 45%. In 2022, the Company acquired 'Dermicool', one of the leading Prickly Heat and Cool Talc brands in India.

Stock To Buy: Target Price & Financial Result

The Current Market Price (CMP) of Emami Ltd. is Rs. 467. Chola Wealth has estimated a Target Price for the stock at Rs. 550. This stock has the potential to give a 17.77% return, in the upcoming 1 year. This is a large-cap stock with a market capitalization of around Rs. 21,455 crore.

Stock Outlook
Current Market Price (CMP)	Rs. 467
Target Price	Rs. 550
Potential 1 year return	17.77%
52 week high share price	Rs. 621.80
52 week low share price	Rs. 393.40

Emami's consolidated 1QFY23 revenue stood at Rs. 7.8bn grew by 17.8% YoY/flat QoQ despite a higher base. The strong performance in major brands aided the performance during the quarter. The domestic volumes grew by 8% on a high base of 38% volume growth in 1QFY22. The EBITDA margin stood at 22.3%, the margin was affected due to the inflationary pressures in the domestic arena. Navratna's sales grew by 29%.

Chola Wealth: Advantages Of The Stock

Suggesting this stock to buy, Chola Wealth said, "The management targets double digit growth in medium term via improvement in distribution network, expansion of product portfolio and launch of newer variants. The late cooling off in RM inflation and price hikes are expected to aid the margin performance. Besides, the synergetic benefits of Dermicool acquisition are likely to proper the overall financial performance in medium term. The company's growth was largely affected due to high COVID led base in pain management and healthcare. 90% of the company's revenue has been made in Q1 and Q4, so the management doesn't expect the transition (Dermicool distribution) to affect its business. At current market price, the stock is trading at a P/E multiple of 21.0x FY24E. We retain our BUY rating on the stock with a target price of Rs. 550. However, adverse product mix and inflationary pressure can affect the company's performance."

Company portfolio

Emami Limited is one of the leading and fastest-growing personal and healthcare businesses in India, with an enviable portfolio of household brand names such as BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Mentho Plus Balm, Fast Relief and Kesh King. The company has launched newer variants of Navratna oil and Navratna cool that partly contributed to higher sales, and it will be taking up the distribution of Dermicool in August. The company's demand softened in both rural and urban markets thus, ultimately contracting the margins. Emami has a portfolio of over 300 products based on ayurvedic formulations. Emami's current operations comprise more than 60 countries. The Company employs more than 3200 people, and reaches out to 49 lakh retail outlets through a network of over 2800 distributors.

Disclaimer

The above stock was picked from the brokerage report of Chola Wealth. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.