Concall Summary: Emami Q4FY20

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Business overview

  • Gross margin for the quarter improved by 440 bps to 65.2%; however advertisement expenditure as a percentage of sales increased by 310% to 18.6%
  • Staff cost at 13.5% of sales, increased by 219 bps. Other expenses at 14.6%, increased by 410 bps due to lower sales
  • Most of the brands have gained market share during the year. The traditional channel was muted but modern trade grew 26% in Q4 and 16% in FY20. Contribution of modern trade increased to 12% in Q4
  • E-commerce grew 167% in Q4 and 128% in FY20. Contribution of e-commerce has increased to more than 1% from 0.5% last year and the company has plan to double it in the current year

Participants

  • Edelweiss
  • Centrum Broking
  • Investec
  • Anived PMS
  • Spark Capital
  • Macquarie

Concall Highlights

  • Emami has commenced operation from 10th April in a phased manner; capacity utilization is now back to pre-COVID level
  • Trade and supply chain also back to normal in most of the regions
  • Emami will extend its personal care and health care products in newer areas
  • Company has launched hand sanitizer in April under Boro Plus brand and also introduced antiseptic soap, hand wash and Aloe vera Gel under the same brand
  • Company has ramped up its healthcare portfolio under Zandu brand  and launched Zandu Ayush Kwath Powder (immunity booster Kadha) and Zandu Ayurvedic Hand Sanitizer; few more immunity-boosting and healthcare products are lined up in Q2FY20
  • Emami will launch home hygiene products shortly under a new brand
  • Summer portfolio got disrupted from the last fortnight of March until the end of April
  • Domestic business declined by 19% while international business declined by 4% during the quarter
  • Company has roped in Bollywood superstar Salman Khan for Navratna range of products
  • Cement deal: CCI has approved the acquisition of cement business by Nuvoco. The deal at the final stage and expected to be completed in next fortnight. Promoters pledge will come down to 45% from 90% currently post this deal
  • Company is on track to reduce the pledge shares to zero by March next year
  • Emami Group has divested its Solar assets to Brookfield Asset Management
  • Rural income likely to improve due Govt. packages and good harvest
  • June 2020 revenue is at par with last year’s June number
  • Emami has appointed an agency for cost optimization and the company is hopeful of Rs 50-60 crore cost reduction in FY21
  • Contribution of the small sachet is very high for Navratna oil
  • Pain category is doing very well
  • Emami is working on 40-50 new products which will be launched gradually; most of the products will be launched on e-commerce
  • Company has no plan to bring “Creme 21” brand into India as of now
Also Read on FinMedium:  Concall Summary: JM Financial Ltd Q4FY20

Image Source : Company Website

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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