Emami Management Meet Update - Cost Control, Re-Engineering Synergies To Support Margins: Dolat Capital
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Dolat Capital Report
Rural is growing as per expectation and Emami Ltd.'s management is not worried about the demand. Rural contributes 51-52% of the company’s revenue. Most categories are growing well despite a very high base.
Under project Khoj, Emami has started off pilot in four states- Uttar Pradesh, Bihar, Maharashtra, Telangana and will be covering 13 more states. Cost to sales stand at ~18-20%. The company added 5200 plus rural towns this year and plan to add ~8000 villages by FY22E end and ~30,000 towns over next two years.
Winter products are doing well, but as base is unfavourable, growth would remain muted. Due to cost pressures, margin are likely to remain muted in winter portfolio. The management expects ~100 basis points decline in gross margin in FY22E.
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