Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Emami Ltd (BOM:531162, Financial) reported a consolidated revenue of INR 906 crores, marking a 10% growth over the previous year.
- The domestic business saw an 8.7% growth in volume terms and a 10% growth in value, driven by the summer portfolio.
- Navratna and Dermicool products grew by 27%, while the healthcare range grew by 11%.
- Modern trade and e-commerce channels performed well, growing by 25% and 29% respectively, contributing 11% to the domestic business.
- International business grew by 11% in constant currency terms and by 10% in INR terms, led by the MENA and SAARC regions.
Negative Points
- The Pain Management Range faced headwinds, declining by 7% due to heatwaves.
- Discretionary consumption was impacted by increasing food prices and muted consumer confidence.
- Kesh King and Male Grooming ranges declined by 15% and 5% respectively.
- Despite the overall growth, the rest of the portfolio excluding the summer products showed almost flattish growth.
- The company faced challenges in the international market, particularly in Bangladesh due to currency depreciation and macro issues.
Q & A Highlights
Q: Congrats on the good set of numbers. My first question is on healthcare and Zanducare. So good 11% growth in healthcare overall with La Nina effect this time, which means generally harsh winter. Would you be extra aggressive in terms of the inventory build up? And in terms of Zanducare, if you could tell us what is the right to win here? We have done well, it seems a good double-digit growth in Q1 in Zanducare. Those five products which are being launched, for example, in the digital first, what is the competition here? How is your pricing versus the other large players? And what is the right to win here? Because digitally, many companies are launching. But ultimately, how do you get a good market share here? Will it be more of pricing-led only? If you could elaborate on that setting?
A: (Gul Bhatia, President - Health Care Division) Yes, thank you for the very pertinent questions you raised. I think, and thanks for your compliments on the growth. I think from a Zanducare perspective, to answer the two, three questions you raised. As you're aware, the focus is on the online sales, whether it is through Zanducare as the D2C platform or through the other e-comm platforms such as Amazon, Flipkart, et cetera and then the e-pharmacy change. And we were also launching many of these products in the modern trade space. So our pricing, obviously, compared to the regular products which are available in the GT space is as a premium. But it's more or less in line with some of our major competitors. So it's not that we are overpriced compared to competition. Secondly, what is our right to win. One is the Zandu brand in itself. In the ayurvedic space, Zandu would be among the top leading players in terms of the consumer perception, consumer equity, brand equity. And thirdly, the kind of product development capabilities we have from an R&D perspective would be unmatched. And the fact that we had two WHO GMP manufacturing units. WHO GMP certification is very difficult to obtain. We are probably the only player who has got two manufacturing units in the country. So from a product quality perspective, from a product efficacy perspective, finally we are in the healthcare space, so we have to deliver on the efficacy. So from all that perspectives whether it is the price change, the marketing strategy, the product quality, the product efficacy, I think we have a right to win on each and every product which we are launching it.
Q: My second question is on the category, which was the most challenging this time. So Kesh King minus 15% Y-o-Y. If I see the largest market share in hair oil, they are also being struggling in value added hair oil for many years now and Kesh King is also in the premium. So where is the customer going, is he just down trading? What will be your sense of growth for the other key player because they have also been advertising a lot? And when I compare this with the 9% growth in the 7 Oils in One, I understand it will be on a smaller base. How do you explain in one 9% growth and then in the more premium 15% decline?
A: (Mohan Goenka, Vice Chairman of the Board, Whole Time Director) Abneesh, Kesh King has a pattern. In some quarters, it comes to growth, in some quarters, it declines depending on the consumer promotions and trade promotions that we offer. Overall, we will not see such kind of a decline going forward. This quarter, hopefully, we will get to growth numbers. So year-end, yes, I agree that it is in the range of about 3% to 4% decline. For that, of course, we are setting up a strategy through BCG. But I'm not very concerned that 15% decline would continue for surely it should not be the decline. Yes. Overall, the market for hair oil, particularly the premium hair fall segment, hair oil market is on a decline for quite some time now. So that we will have to see when the consumer bounces back, not very sure. But rural, has the rural market is picking up, we are seeing some green shoots, hopefully, it should come to a positive trend.
Q: One question on demand side. So how was the July month with respect to demand environment side, specifically in the rural market? If you can quantify how is the overall situation during the 2Q, specifically for the July month?
A: (Mohan Goenka, Vice Chairman of the Board, Whole Time Director) July was quite good, Binay. So we'll have to wait for another because monsoon is good in most parts of the country. So we are seeing a good demand sector.
Q: What percentage of revenue came from summer-linked portfolio in this quarter? And what was the growth in the summer portfolio overall? And what was the growth for the rest of the portfolio?
A: (Mohan Goenka, Vice Chairman of the Board, Whole Time Director) So summer portfolio this quarter grew by almost 27%, which was primarily Navratna and Dermicool. So -- and revenue of this portfolio would be -- have been roughly 50%, half of the revenue came from summer portfolio.
Q: I just had one follow up, Raj ji please help me understand the amortization schedule for this year and going forward?
A: (Gul Bhatia, President - Health Care Division) Yes, sure Harit. So this year, amortization would be roughly INR92-odd crores kind of. And going ahead, it would be INR88 crores, INR75 crores for next 2 years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
