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ICICI Securities Report
Emami Ltd.’s Q1 FY21 volume declined 28% as a large part of the portfolio is discretionary (within staples) in nature. Highlights as follows:
1. Strong performance in healthcare portfolio supported by new launches (approximately 5% of sales)
2. Sequential improvement in performance (8% growth in June, double-digit growth in July)
3. Secondary sales (down 15%) better than primary (down 26%)
4. Channel inventory correction to approximately 18 days from approximately 30 days (potential buffer for sales improvement in FY21)
5. Reduced the credit period offered to channel partners to approximately five days from approximately 14 days earlier
Consensus worries on promoter debt levels have largely been allayed (cement deal concluded, promoter pledge reduced to 55% from 90%, will further go down to 50% as per guidance), we expect the stock's discount to the sector to reduce from 67% currently.
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