EMAMILTD - Emami Ltd Share Price

Management Outlook:
Emami's management expressed confidence in closing FY25 on a high note, citing improving macroeconomic indicators and a sequential revival in FMCG demand. Key growth drivers include the successful rebranding of Fair and Handsome to Smart and Handsome (targeting holistic male grooming), recovery in international markets, and interventions to revive Kesh King. Rural demand resilience and urban recovery are expected to aid growth. Margins are projected to remain healthy, supported by cost optimization and mix improvements.

Major Points:

1. Growth Metrics:

   • Core domestic business grew 8.6% YoY in Q3 (volume growth ~6%); 9-month growth at 7%.
   • BoroPlus grew 20% (driven by antiseptic cream); healthcare portfolio up 13% (Zandu Care +90%).
   • International business declined 3% (Russia/Ukraine challenges), but recovery expected in Q4.

2. Margin Expansion:

   • Gross margin improved 150 bps to 70.3% in Q3; EBITDA margins up 70 bps to 32.3%.

3. Strategic Initiatives:

   • Smart and Handsome rebranding to expand into face, body, and hair care; new product launches planned.
   • Organized channels (modern trade, e-commerce) now contribute 28.6% of domestic sales (+160 bps YoY).

4. Dividends:

   • Declared cumulative interim dividend of 800% (Rs.8/share) for FY25.

5. Challenges & Interventions:

   • Kesh King declined 10% (category slowdown); BCG-led strategy underway for revival.
   • The Man Company (TMC) is stabilizing post-transition, with Q4 recovery expected.

6. Macro Factors:

   • Rural demand supported by monsoon/harvest; urban slowdown persists due to inflation.

Outlook: Focus on innovation, distribution expansion, and brand-building to drive market share gains. FY25 will prioritize profitable growth and shareholder returns.

Question: Congrats on good volume growth and overall momentum. My first question is on the two segments which have done well this quarter, one is BoroPlus 20% growth and healthcare 13% growth. That's a good number in the current slowdown and late winter also. So is it because of some base effect which is favorable or you have really seen market share expansion or the new product launches, which are doing well? And would you say that this is something which can sustain within Q4?
Answer: BoroPlus growth was driven by antiseptic cream's strong performance (+20%) despite mild winters, aided by a low base. Healthcare growth (+13%) was led by Zandu Care (+90%). Both segments are expected to sustain double-digit growth in Q4, supported by momentum and favorable market conditions.

Question: Sir, and last question will be on The Man Company. So where do you see the recovery happening? What are the steps needed here?
Answer: The Man Company's challenges included compressed festive sales timing and delayed adoption of quick commerce. Sequential improvement is expected in Q4, with growth initiatives like expanded quick commerce presence and stabilized urban demand.

Question: Just wanted to get a sense of what changes now you're kind of looking to make in [Kesh King] and when do we start to see that play out in the market?
Answer: Kesh King's decline (-10%) reflects broader category challenges. BCG-led strategy overhaul, including potential expansions into shampoo and haircare, is underway. Turnaround expected in 1"“2 quarters after interventions.

Question: On Smart and Handsome, when do we expect the entire rollout in the market?
Answer: Rebranding (Fair & Handsome → Smart & Handsome) for core products is complete, with new ads live. Extended grooming portfolio (body/haircare) will launch in 3"“4 months. Pricing remains unchanged.

Question: What is the rural vs. urban growth differential?
Answer: Rural demand outperformed urban due to favorable monsoons/harvests, driving BoroPlus (+20%) and healthcare. Urban growth was impacted by liquidity constraints in trade channels.

Question: What drove gross margin expansion (150 bps to 70.3%)?
Answer: Mix improvement (high-margin BoroPlus), pricing hikes (~1.5"“2.5%), packaging cost savings, and lower input costs contributed. Margins to remain stable.

Question: How are you managing channel conflicts (MT/e-commerce vs. GT)?
Answer: Channel-specific SKUs (sachets for rural, large packs for MT/e-commerce) minimized conflict. Organized channels (28.6% of sales) grew faster, driven by MT/e-commerce.

Question: What's the outlook for The Man Company's distribution?
Answer: Currently, 75% online (e-commerce), 25% offline (EBOs, MT). Focus on expanding offline via traditional trade while maintaining online dominance. Inventory normalization complete.

Question: How did healthcare brands like Zandu Chyawanprash perform?
Answer: Healthcare growth (+13%) was led by Zandu Care (+90%), Vigorex, and generics. Pancharishta declined post-COVID due to category-wide shifts; packaging/campaign revamps planned.

Question: What's the tax rate guidance?
Answer: FY25 tax rate ~8"“9%, expected to stay ~10% in FY26.

Question: Why did international business decline (-3%)?
Answer: Russia/Ukraine (-13%) faced inflation/credit constraints, offsetting growth in Bangladesh, Africa, and GCC. Recovery expected in Q4.

Question: How will Dabur's Sesa acquisition impact Kesh King?
Answer: No immediate threat. Kesh King's challenges are category-specific (oil slowdown). Expansions into shampoos/other haircare under BCG strategy to revive growth.

Question: How will liquidity constraints in trade channels ease?
Answer: Post-COVID credit cycles (~16"“17 days receivables) remain persistent. No near-term resolution expected, but growth initiatives (new launches, distribution) to offset pressures.