Emami -Q2FY13 – Sales in line, but EBITDA below:: Nomura

Are results above or below expectations?
Results were largely in-line with Street expectations and marginally
below our expectations at the EBITDA level.
Key numbers
 Net sales grew 18% y-y and were largely in line with our and Street
expectations.
 Domestic business grew 22%, which is fairly robust.
 Exports (13% of revenues) were largely flat y-y and so was CSD (4%
of the revenues).
 Brand-wise revenue growth details:
 Cooling oil: +14% y-y
 Boroplus: + 53% y-y
 Balms: + 10% y-y
 Fair & handsome: + 26% y-y
 Gross margin expanded 50bps to 58.6%. This was largely in line with
what we were expecting.
 However, A&P/sales: up 50bps y-y to 17.9%. This was a surprise;
however, we don't quite view this as a negative.
 EBITDA: At INR896mn was 5% below our estimates and in-line with
Street expectations.
 EBITDA margin: at 24.8% contracted 180bps y-y primarily due to
higher employee cost & advertising spends.
 PAT: at INR612mn was up 7% y-y and in line with Street expectations,
but below ours on account of a higher tax rate.

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