Emami Posts 30% Higher Net Profit

Emami reported its consolidated numbers for the quarter ending March 31, 2013 earlier today. Its consolidated net sales in Q4FY13 were at Rs 451 crore, which marks a growth of 13.32% as compared to Rs 398 crore in Q4FY12. Its EBITDA grew by 16.44% to Rs 125.51 crore, on a yearly basis. At the same time, its net profit was higher by 30% to Rs 93.96 crore on a YoY basis.

There was significant improvement in margins despite an increase in raw material costs. As a percentage of sales, raw material costs in Q4FY13 stood at 33.71%, which is a rise of 460 basis points as compared to the corresponding quarter in the previous year. In Q4FY13, its advertising expenses remained flat at 10.85% as against 9.19% for Q4FY12.

According to the management prices of key raw materials like menthol have started softening and this will result in some margin expansion. Going forward, in FY14, the management has indicated raising prices by around 4%, which will further help in improving margins. To further improve profitability, the company has discontinued low margin products like Bonita and Emita. It has also indicated that there was a correction in the distributors’ inventory holdings in a few countries like Russia, Dubai, Middle East and Bangladesh.

Emami declared a dividend of Rs 8 per share, taking the dividend yield to 1.18%. The company has also declared a bonus issue in the ratio of 1:2. At the current market price, the stock discounts its FY13 EPS by 32.70x. In today’s trade, the stock has appreciated by 2.31% to close at Rs 680 on BSE. Based on better than expected results, we can expect a few more sessions of upward movement in the stock prices of Emami in the coming days.