Emami Soars 7% As Board Mulls Share Buyback; Know Details

Shares of Emami rallied nearly 7 per cent to Rs 369.4 in Wednesday’s trade on BSE after the company said that its board will consider a proposal for a buyback of equity shares this week.

“We wish to inform you that a meeting of the board of directors of the company is scheduled to be held on Friday, 24th March 2023 inter alia, to consider a proposal for buyback of fully paid-up equity shares of the company,” the company said in a BSE filing.

The primary objective of a share buyback programme is to arrest the fall in the value of a stock by reducing the supply of the stock, which essentially pushes up the share price through a better price to earnings (P/E) multiple.

Shares of Emami had hit a 52-week low of Rs 340.95 on Monday, March 20, 2023. Meanwhile, in the past three months, the stock was down 16 per cent, as against 4 per cent decline in the S&P BSE Sensex. Further, in past six months, it has slipped 30 per cent, as compared to 1.5 per cent fall in the benchmark index.

Emami reported a 6.13 per cent year-on-year (YoY) increase in its consolidated net profit to Rs 232.97 crore for the Q3FY23 from Rs 219.52 crore for the corresponding period last fiscal. Its revenue from operations during the period rose 1.2 per cent YoY at Rs 982.72 crore compared with Rs 971.06 crore for the same period of FY22.

Volume growth continued to remain a cause for concern for Emami although the base is likely to turn favourable going forward, according to analysts.

The slowdown in rural areas, where Emami has a higher presence (~55 per cent rural mix) vis-a-vis some of the other FMCG peers, has affected topline performance in the near term even as rural penetration continues to progress steadily with Project Khoj. Rural recovery and correction in Pain Management & Healthcare coming into the base should improve growth going forward. Margins are also expected to improve as pressure from input cost inflation moderates, analysts at Nirmal Bang Institutional Equities said in December quarter result update.

Emami is one of the leading and fastest-growing personal and healthcare businesses in India, with an enviable portfolio of household brand names such as BoroPlus, Navratna, Fair and Handsome, Zandu Balm, Mentho Plus Balm, Fast Relief, and Kesh King.

The company has a portfolio of over 300 plus products based on ayurvedic formulations. Emami’s current operations comprise more than 60 countries including SAARC, MENAP, SEA, Africa, Eastern Europe and the CIS countries.

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