Emami — Q2 FY26 earnings call

Call held 10 Nov 2025

Management summary

Emami's Q2 FY26 performance was significantly impacted by a transformational GST rate reduction, which caused temporary trade disruptions and deferred winter loading. Despite a 10% consolidated revenue decline and a 15% fall in domestic business, the company maintained gross margins at 71%. Strategic initiatives like the Kesh King Gold relaunch and Smart & Handsome expansion are underway, and management anticipates a strong recovery and double-digit growth in the second half of the fiscal year, driven by favorable winter conditions and normalization post-GST.

Highlights

  • Consolidated revenues declined by 10% to INR 799 crores.

  • Domestic business saw a 15% decline, primarily due to GST rate changes and seasonal impacts.

  • GST rate reduction impacted 88% of the core domestic portfolio, moving from 12-18% to 5%.

  • International business delivered a steady 8% growth despite macro and geopolitical headwinds.

  • Gross margins remained stable at 71%, reflecting cost discipline.

  • EBITDA stood at INR 179 crores, declining by 29%.

  • PAT declined by 30% due to lower top line.

  • An interim dividend of 400% (INR 4 per share) for FY26 was declared.

  • October witnessed a healthy rebound in trade sentiments, with deferred winter loading recovered.

Concerns

  • Temporary trade disruptions due to GST rate change

Key financials

  1. Consolidated Revenue ₹799 Cr -10%YoY
  2. Domestic Business Growth — -15%YoY
  3. International Business Growth — +8%YoY
  4. Gross Margin 71%
  5. EBITDA ₹179 Cr -29%YoY
  6. PAT Growth — -30%YoY

What they filed

Q1 FY27: revenue up 3.2%, net profit up 11.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue709 879 781 756 604 −15%958 +9%730 −7%780 +3%
EBITDA226 328 191 201 168 −26%385 +17%196 +3%215 +7%
Net profit214 279 190 163 182 −15%330 +18%166 −13%182 +12%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Medico Range
    8% Growth
  • Zandu Cough Syrup
    43% Growth
  • Honey
    36% Growth
  • Zandu Care
    17% Growth
  • Strategic Investment Portfolios (Brillare & TMC)
    16% Growth YoY36% Growth Sequential
  • SAARC Markets
    22% Growth
  • Nepal
    100% Growth
  • GCC and MENA Markets
    0% Growth

Capital allocation

high confidence
  • Dividend ₹4/share (interim)
    The Board of Directors also declared an interim dividend of 400%, amounting to INR4 per share for FY '26.

Guidance & targets

Profitability

  • Gross Margins Profitability · H2 FY26 · High confidence improve
    So Arnab input side, there is absolutely no pressure. It's well under control. And margins are definitely going to improve.

    — Mohan Goenka

  • EBITDA and Net Margins Profitability · Q3 FY26 · High confidence expansion and high growth
    But I'm sure there would be expansion in margin. There would be a high growth in our EBITDA margins and net margins in Q3.

    — Mohan Goenka

Revenue

  • Q3 FY26 Growth Revenue · Q3 FY26 · Medium confidence close to double digit, definitely high single digits
    But I'm definitely expecting close to double digit, but definitely high single digits is 100% on the cards.

    — Mohan Goenka

  • H2 FY26 Growth Revenue · H2 FY26 · Medium confidence strong double digit
    In the second half, we expect the business to grow at even a higher rate than the first half, strong double digit.

    — Mohan Goenka

  • FY27 Performance Revenue · FY27 · High confidence much better than FY26
    So FY '27 should definitely be much better than FY '26. There's no doubt in it.

    — Mohan Goenka

International Business

  • Performance International Business · coming quarters · Medium confidence better improvements
    And we hope to have better improvements in coming quarters in most of the geographies.

    — Vivek Dhir

Healthcare Business

  • Performance Healthcare Business · Q3 FY26 · High confidence better performance
    And even in the OTC business, we would do a better performance in quarter 3.

    — Gul Raj Bhatia

What to watch in Q3 FY26

Q3 FY26 Revenue Growth

Q3 FY26
Current Q2 FY26 consolidated revenue declined 10%
Target Close to double-digit growth, definitely high single digits

Why it matters

Verifies management's confidence in recovery post-GST and winter loading.

But I'm definitely expecting close to double digit, but definitely high single digits is 100% on the cards.

Risks & concerns

  • Temporary trade disruptions due to GST rate change

    high

    Trade channels and consumers deferred purchases in anticipation of lower MRPs, and distributors liquidated higher cost inventory.

    Management acknowledged

  • Deferment in winter portfolio loading

    medium

    The timing of GST rate change coincided with peak winter pipeline buildup, leading to deferment.

    Management acknowledged

  • Challenging summer portfolio performance

    medium

    Heavy rains significantly impacted demand for talc and prickly heat powders, combined with a high base from last year.

    Management acknowledged

  • Persistent macro and geopolitical headwinds

    medium

    Impacted international business, particularly in GCC and MENA markets like Egypt and Bahrain.

    Management acknowledged

Q&A highlights

8 direct
Recovery of GST-driven destocking Direct
Nitin, we are very confident that it will be recovered in Q3. We have seen a bit of recovery in October itself because we could not load it in the last days of September, which got loaded in October.

Addresses the impact of GST destocking and provides confidence in Q3 recovery.

Asked by Nitin Gupta

Kesh King Gold relaunch and marketing strategy Direct
Yes. So Kesh King is a -- was a pure Ayurvedic-based product. Of course, we added science to Ayurveda. We upgraded the formulation with some ingredients like Gro Biotin and plant Omega 369, which are scientifically proven ingredients to enhance the results. So it is a pure now Ayurveda and science-backed formulation.

Explains the strategic shift for a core brand, incorporating science with Ayurveda to appeal to modern consumers and compete with D2C brands.

Asked by Percy Panthaki

Rural consumption trends and Kesh King's focus Direct
Definitely, Nitin, I think recently, we have seen good demand coming up from the rural side for all our categories. And as far as Kesh King is concerned, we are really focusing on the shampoo sachets, particularly drive the growth of the sachets.

Provides insight into rural demand recovery and specific category-level strategies.

Asked by Nitin Gupta

Smart & Handsome expansion and cannibalization risk Direct
Not really. These are absolutely at different price points and different categories altogether. It will not compete with the TMC. Definitely, yes, there is a structural shift that's why such bold steps are being taken.

Clarifies the positioning of new product lines and addresses concerns about internal competition.

Asked by Nitin Gupta

Winter loading and outlook Direct
Winter has set in exceedingly well across, particularly the North, Eastern and also the Western Central side. So the loading has been, of course, more than expectation because we could not load in the month of September, but October has been an excellent start.

Indicates positive early signs for the winter season, which is crucial for Emami's portfolio.

Asked by Nitin Gupta

Confidence in H2 double-digit growth Direct
I'm just being a little conservative, Arnab, because winter, as I said, has started with a very fine note, but it's yet to get into the winter season, okay? But you are right, I'm confident of double digit, not that I'm not. If the winter goes on like this, then nothing can stop for double digit for sure.

Management expresses strong confidence in achieving double-digit growth in H2, contingent on continued favorable winter conditions.

Asked by Harit Kapoor

Impact of GST cut on demand elasticity Direct
I'm sure, Arnab, it should work across categories, whether it is the balms, whether it is oils. See, overall, we have seen almost only in Emami domestic business, the reduction on MRP is roughly INR260 crores. So that benefit is going to go to the consumers. So it should definitely help.

Highlights the significant consumer benefit from GST reduction and its expected positive impact on demand across categories.

Asked by Arnab Mitra

International business growth breakdown Direct
SAARC has done exceedingly well for us. SAARC markets, including Bangladesh, we had delivered over 22% growth over there. So GCC and MENA markets have been flattish for us, primarily because of one major market, Egypt, where we couldn't do much, but rest of the markets have also shown decent growth in the marketplace.

Provides a granular view of international market performance, identifying strong and weak regions.

Asked by Akash Shah

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview and GST Impact

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.

Strategic Initiatives and Product Launches

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.

Segmental Performance Highlights

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.

International Business Performance

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.

Financial Health and Outlook

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.

Channel Strategy and Rural Demand

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.

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