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Kolkata: MNC brokerage Goldman Sachs has retained a Buy signal on Emami. Its target price has recorded a significant upside. As many as 27 analysts have filed reports on Emami and out of them 21 of them have assigned Buy rating. One has assigned Sell while five have advised Hold.
Emami was set up in the 1970s in Kolkata. It is active in the manufacture and marketing of personal and healthcare products and the products are mostly Ayurvedic formulations. It has turned into a strong FMCG player in the country and beyond its FMCG business, the group is a diversified conglomerate with ventures in areas like edible oils, real estate, paper, retail and pharmacy. Some of its brands are Navratna, BoroPlus, Zandu and Kesh King and the products are sold in over 70 countries.
The company's website says revenue in FY25 was Rs 3809 crore. Emami is a fully debt free company. It has a huge distribution network with more than 3,400 distributors and a outlet reach of 5.4 million. According to the company 6.9 crore households buy their products in India. The company has five manufacturing units In India and more than 3,200 employees.
Goldman Sachs assigned a target price of Rs 825 for Emami. The shares were trading at Rs 529.45, up Rs 1.65 or 0.31% at 1 pm on Nov 28. It is reportedly the highest on D Street and makes an upside of nearly 56% compared to the market price. Godman Sachs is of the opinion that a robust recovery will be witnessed in the scrip in the next four quarters. This will drive up the price of the stock.
The market cap of the stock is Rs 22.66K crore. The P/E ratio is 30.66. The 52-week high of Emami is Rs 689.50 and the 52-week low is Rs 498.45. The brokerage said that that Emami's growth and valuations relative to the sector appear disconnected. It also mentioned that the volatility in earnings is covering up a growth trajectory which appears otherwise reasonable. Goldman Sachs thinks it is impacting valuations of Emami.
Godman Sachs has highlighted four downside risks. These are intense competition in niche segments, overexposure to dominant niche segments, management team transitions and unfavourable weather conditions.
