Emami pines for rural recovery

Emami Ltd’s shares have been flattish in the past year. A key factor that is keeping sentiments muted for the stock is a weak rural demand recovery outlook due to deficient rainfall so far. Emami has vast rural exposure, contributing about 50% to its revenue.

- Vineetha Sampath & Pallavi Pengonda

“Caution is warranted especially for companies with high rural salience," said a consumer report by Jefferies India dated 18 September. Weak volume performance could continue for Emami in case of a failed monsoon, they added.

Plus, it has not helped that Emami’s product portfolio has a seasonality element. For instance, Emami’s summer portfolio includes Navratna range, Dermicool, BoroPlus prickly heat powder and Golden Beauty talc. The BoroPlus antiseptic cream is typically a winter product. On the other hand, some products like Zandu, Kesh King, Fair and Handsome and 7 Oils in One are not affected by seasonality. In the second half of FY23, Emami’s sales were negatively impacted by a warmer winter season and unseasonal rains.