Emami Ltd

Emami put up a poor face for Q2FY16. The company posted a 33%(YoY) drop in consolidated net profit at Rs.61 crore mainly on account of amortization of Kesh King intangible assets of Rs.62 crore. The company had acquired hair & scalp care business under the ‘Kesh King’ and allied brands for Rs.1684 crore in June 2015. It raised debt of around Rs.950 crore to partially fund the acquisition. The balance was funded by internal accruals. The company’s dent currently stands at Rs.963 crore v/s Rs.20 crore (QoQ) and interest outgo has jumped up from a little over Rs.1 crore in Q2FY15 to Rs.19 crore in current Q2. The other profitability parameters were much better. Turnover rose 17% at Rs.575 crore and EBITDA was up 34% at Rs.152 crore. Margins rose from 23.1% to 26.5% (YoY).

The power brands continued to maintain leadership in key categories in H1FY16. Cooling Oils grew its volume market share by 860bps at 73.5% and Cool talc grew its volume market share by 20 bps at 6.2%. Balms, Boroplus Antiseptic cream and Fair and Handsome maintained their leadership positions with volume market shares at 56.4%, 77.3% and 62.4% respectively. In the healthcare range, which includes Zandu Pancharishta, it showed a 37% growth in H1 with its sales growing 84%. Kesh King took away 10% of domestic sales growth in Q2 and 6% of H1. The company has roped in Shruti Hassan to promote the brand in South India.