Emami

Emami reported a challenging Q2 FY26, with consolidated revenues declining by 10% to INR 799 crores. The domestic business was particularly affected, witnessing a 15% decline. This downturn was primarily attributed to the transformational GST rate reduction, which caused temporary trade disruptions in September as channels deferred purchases and liquidated higher-cost inventory. Additionally, the summer portfolio faced a second challenging quarter due to heavy rains, impacting demand for talc and prickly heat powders, and the winter portfolio loading was deferred.

The company is actively pursuing purposeful innovation and premiumization. The Fair and Handsome brand was transformed into Smart and Handsome, with 12 new products launched across various categories, showing encouraging initial rollout in modern trade and e-commerce. Kesh King was strategically relaunched as Kesh King Gold, incorporating 'Ayurveda plus science' with ingredients like Gro Biotin and plant Omega 369, based on deep consumer research. This move aims to enhance credibility and relevance among modern consumers and compete with D2C brands.

Despite the overall decline, some segments showed encouraging growth. The Medico range grew by 8%, Zandu cough syrup by 43%, Honey by 36%, and Zandu Care by 17%. Strategic investment portfolios, including Brillare and TMC, rebounded with 16% year-on-year growth and 36% sequential growth. The healthcare segment, particularly the Ayurvedic business catering to doctors, also contributed positively.

Emami's international business delivered a steady 8% growth, navigating persistent macro and geopolitical headwinds. SAARC markets, including Bangladesh, performed exceptionally well with over 22% growth. Nepal alone saw a 100% growth. However, GCC and MENA markets remained flattish, primarily due to challenges in key markets like Egypt and Bahrain, which the company is actively addressing.

Gross margins remained stable at 71%, underscoring the company's cost discipline and input price stability. However, EBITDA declined by 29% to INR 179 crores, and PAT declined by 30%, reflecting the temporary impact of lower top line. The Board declared an interim dividend of 400% (INR 4 per share) for FY26. Management is optimistic about a robust and profitable second half, with October already showing a healthy rebound in trade sentiments and recovery of deferred winter loading. They anticipate close to double-digit growth in Q3 and a much better FY27.

Emami continues to focus on organized channels, including quick commerce, modern trade, and D2C websites, which are showing strong growth and catering to young consumers. In traditional channels, the company maintains a strong network and presence. Management noted good demand coming from the rural side for all categories, with a particular focus on shampoo sachets for Kesh King to drive rural market growth. The INR 260 crores MRP reduction due to GST is expected to benefit consumers and stimulate demand across categories.