Resilient profit led Emami’s growth in Q3FY24 amidst challenging macro environment

Emami Limited’s consolidated revenues for the third quarter ended December 31, 2023 stood at Rs 996 crore, a slight growth of 1%, with a flat growth in Domestic Business. However, non-winter products grew by 5%. The International business delivered a constant currency growth of 11%, primarily attributed to robust performance in the MENAP region.

During the quarter, the company launched Zandu Agni Balm - a stronger multi-purpose balm to counter regional competition and gain share for overall balm portfolio. The company also launched 5 digital first launches during the quarter on its D2C portal Zanducare - Zandu Mahabhringraj Tel, Zandu Shilajitprash , Zandu Livital - Ayurvedic Liver Syrup & Tablets and Zandu Dantveer Ayurvedic Toothpaste. In the International markets, the Company launched Creme21 Pure Glycerin Oil and 7 Oils in One Double Conditioning Shampoo range.

In light of reduced input costs, Emami experienced a noteworthy enhancement in gross margins, reaching 68.8%, reflecting a substantial expansion of 290 basis points during the quarter. Furthermore, EBIDTA at Rs 315 crore grew by 7%, with margins expanding by 170 basis points to 31.6%. Profit after tax at Rs 258 crore, also grew by 9%, with margins expanding by 180 basis points to 25.9%.

Q3 FY2024 highlights

• Consolidated Revenues at Rs 996 crore grew by 1%
• Domestic Business posted flat growth (5% growth excluding winter contextual products)
• International Business grew by 8% (Constant currency growth of 11%)
• Gross Margins at 68.8% improved by 290 bps
• EBIDTA at Rs 315 crore grew by 7% o EBIDTA Margins improved by 170 bps
• PAT at Rs 258 crore grew by 9%; Excluding one-off exceptionals, PAT grew by 11%
• PAT Margins improved by 180 bps
• Interim dividend of 400%, that is, Rs 4 per share

The third quarter witnessed subdued demand trends particularly in rural markets. Moreover, the period was characterised by the late onset of winter, negatively impacting the demand for winter contextual products. Despite these challenges, the company navigated the dynamic business environment, demonstrating resilience and achieving profit-led growth during Q3FY24.

For the nine months ending December 2023, Emami witnessed a 5% increase in revenues, coupled with an expansion of gross margins by 290 basis points. EBIDTA surged by 11%, with margins expanding to 27.5%, indicating a rise of 170 basis points. Notably, the profit after tax demonstrated an impressive surge of 16%, amounting to Rs 575 crore. The Board of Directors also recommended a second interim dividend of 400%, translating to Rs 4 per share for the fiscal year 2024.

The company remains optimistic about future growth, supported by a favourable economic landscape, a positive trend in inflation, anticipated rural market recovery, government initiatives, and promising macroeconomic factors, all contributing to a confident outlook for sustained positive performance.

Harsha V Agarwal, Vice Chairman and Managing Director, Emami Ltd, said, “I am happy that we could deliver another quarter of resilient performance along with substantially improved profitability with a 7% growth in EBIDTA and 9% growth in Profit after Tax, despite subdued demand in Q3. Disrupted winter, weak rural demand and continued inflationary woes impacted the winter and discretionary offtakes. We remain committed to deliver volume led profitable growth going forward aided by accelerated scale up of emerging channels, distribution initiatives, ongoing brand and strategic investments coupled with launch of innovative products.”

Mohan Goenka, Vice Chairman and Whole-Time Director, Emami Ltd, said, “We showcased our adaptability in the face of changing market dynamics to post a resilient revenue growth despite a delayed winter. Our International business posted an impressive 11% constant currency growth led by MENAP region. Our commitment to innovation remains unwavering, marked by the launch of various new innovative products both in domestic and international markets, underscoring our dedication to driving future growth and delivering value to our stakeholders.”