Emami Ltd is gearing up for a better FY25, eyeing double-digit domestic revenue growth after clocking a 4% increase in FY24. So, what’s the game plan? More focus on direct-to-consumer (D2C).
Emami recently acquired the remaining 49.6% stake in The Man Company for ₹180 crore, cementing its position in the premium male grooming market—a segment that’s doing well as men become more conscious about grooming.
With a zero-debt status and healthy cash pile, Emami has the flexibility to invest. The FMCG company plans to inject over ₹200 crore into new categories like healthcare and nutrition. This suggests a strategic pivot to align with changing consumer trends. As such, modern trade and e-commerce now account for about 22% of Emami’s domestic revenue, a leap from just 5% five years ago.
Further, to fuel growth, Emami has a steady pipeline of digital-first product launches in FY25, aiming to drive overall volume growth to 6-7%. The company expects lower raw material costs to aid gross margin expansion, but substantial rise in advertising and promotional spends could curb Ebitda margin increase.
Meanwhile, the La Niña effect, bringing above-normal rainfall and a potentially cold winter, is expected to boost demand for Emami’s winter and healthcare portfolios. Products like ‘Zandu’ and ‘BoroPlus’ should benefit from this in the coming quarters. After a subdued Q1FY25, Emami’s ‘pain management’ range is expected to rebound in Q2 and Q3 as seasonal illnesses associated with cold and rain boost demand.
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Also, the impact of the Bangladesh crisis is expected to be small for Emami in Q2 given the modest 4% revenue exposure to the market.
The government’s emphasis on boosting rural growth could act as a catalyst for Emami’s domestic business. Rural markets contribute about 50% of Emami’s revenue.
“Buoyed by competent management and favourable seasonality, Emami is one of the better rural recovery plays,” said an Emkay Global Financial Services report on 16 September. Investors seem to have taken note.
The stock has climbed 30% in 2024 till now. “Valuation gap with listed mainstream FMCG peers has reduced and is likely to narrow further, with better performance,” added Emkay. Earnings delivery will be crucial hereon.
Also Read: Consumer goods makers are hopeful a ‘normal monsoon’ will heat up demand
