Emami Ltd. reported decent revenue growth of 6% YoY with 4% YoY domestic revenue growth (+2% YoY volume growth) as mass market continued to underperform while urban-oriented channels (modern trade and e-commerce grew by ~18% and ~50% YoY) and digital-first brands (+63% YoY) outperformed.
International business continued its strong performance with 12% YoY revenue growth (+16% YoY constant currency growth).
We believe Emami has taken several initiatives (distribution expansion, new product launches, continued brand investments and improved performance in new-age channels) to drive growth, but results are yet to be seen due to weak macros.
Performance should improve going forward with expectations of strong winter demand along with festive season.
Gross margins and operating margins remain healthy with ~350 basis points YoY and ~300 bps YoY expansion, respectively, driven by input cost correction. Maintain ‘Add’.