Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Emami Ltd (BOM:531162, Financial) achieved a robust growth of 8.6% in its core domestic business with a volume growth of around 6%.
- The BoroPlus range demonstrated remarkable resilience, growing by 20% despite delayed and mild winters.
- The healthcare range delivered robust growth of 13%, led by a 90% growth in Zandu Care.
- Gross margins expanded by 150 basis points to 70.3%, and EBITDA grew by 8% to INR339 crores.
- The company declared a second interim dividend of 400%, translating to INR4 per equity share for FY24, reaffirming its commitment to maximizing shareholders' return.
Negative Points
- Urban demand remained subdued, impacted by rising food inflation and cash-strapped retail and wholesale trade.
- Male Grooming and Kesh King segments declined by 4% and 10% respectively during the quarter.
- International business revenues declined by 3%, with significant challenges in the Russian market due to high inflation.
- The Man Company faced challenges due to compressed festive activities and a delayed shift to quick commerce.
- Kesh King continues to face category issues, with the entire oil category experiencing a slowdown.
Q & A Highlights
Q: 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. Is this due to a favorable base effect, market share expansion, or new product launches? How do you see Q4 for these two businesses?
A: Mohan Goenka, Vice Chairman of the Board, Whole Time Director: BoroPlus growth is led by the core antiseptic cream, growing phenomenally in double digits. The base was low, but the 20% growth is exciting. This momentum continues in Q4. Healthcare has consistently shown double-digit growth, led by Zandu Care. We expect double-digit growth in both BoroPlus and healthcare this quarter.
Q: On The Man Company, where do you see the recovery happening? Are there specific steps needed, or will it be more of a base effect?
A: Giriraj Bagri, Chief Growth Officer: We are seeing sequential month-on-month improvement in performance. We expect Q4 to be significantly better than Q3. Challenges included compressed festivities and a delayed shift to quick commerce, but we are catching up.
Q: What changes are you looking to make in Kesh King, and when will they play out in the market?
A: Mohan Goenka, Vice Chairman of the Board, Whole Time Director: BCG is evaluating Kesh King. We expect a robust strategy soon, similar to the changes made in Fair and Handsome. It may take one or two quarters, but we are confident of a revival.
Q: Can you explain the drivers behind the gross margin expansion despite no commodity deflation?
A: Mohan Goenka, Vice Chairman of the Board, Whole Time Director: The expansion is due to price hikes, improved realizations, lower input prices in some areas, and cost reduction initiatives. Packaging material costs have decreased, and pricing benefits were seen across larger packs.
Q: How is the international business performing, and are there plans for new product expansions?
A: Vivek Dhir, CEO, International Business: High inflation in Russia impacted Q3, but Russia still delivered double-digit growth over nine months. Product expansion is ongoing in different geographies, with mixed responses in Bangladesh. We expect a good revival in Q4.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
