Event Participants
Executives
6 Dhruv Aggarwal, Gul Raj Bhatia, Vivek Dhir, Mohan Goenka, Manish Gupta, Rajesh Sharma
Analysts
7 Kaustav Bubna, Vaibhav Gupta, Harit Kapoor, Arnab Mitra, Percy Panthaki, Abneesh Roy, Kunal Vora
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Revenue | ₹1,039 crores | +15% YoY; consolidated growth including acquisitions |
| Domestic Business Growth | +20% YoY | +12% like-to-like, +8% volumes after excluding Axiom & IncNut base year effects |
| Strategic Investment Portfolio | ~₹160 crores Q1; ~18% of domestic business | +61% like-to-like; TMC, Brillare, Axiom, IncNut all growing "well north of 20%" |
| EBITDA | ₹226 crores | +6% YoY despite ~360bps input cost inflation; EBITDA margin ~21.8% |
| Profit Before Tax | ₹195 crores | +4% YoY |
| Profit After Tax | ₹137 crores | -16% YoY on tax normalization (effective rate ~29% vs. low-teens fiscal benefits previously; ~25-26% expected for FY27) |
| Input Cost Inflation Impact | ~360 bps | ~200bps from West Asia conflict (crude), ~160bps from portfolio mix (startups lower margin) |
| International Business | -12% YoY | West Asia conflict disrupted order execution; OTC pain management shipments from India still stuck |
| Organized Channels Share | 32% of domestic business | +19% like-to-like; Quick Commerce now 35% of e-com business |
| Other Income | ₹53 crores (standalone) | Includes ~₹32 crores dividend from international subsidiary (knocked off in consolidation) |
Geographic & Segment Commentary
Hair & Scalp Care: +11% growth, strongest performing category. Navratna Cool Oil posted strong double-digit growth; Kesh King mid-single-digit (targeting double-digit by year end); 7 Oils in One continued robust growth as a fast-growing brand.
Skincare: +3% growth on significant regional divergence in summer. Talc portfolio delivered high single-digit growth with substantial recovery expected during the year; male grooming and Boro Plus registered low single-digit growth.
Healthcare: +2% growth. OTC portfolio grew high teens, driven by Pancharishta and Nityam positioning campaigns (strong double-digit in Q1); Medico range posted single-digit growth with innovative new launches and category-A doctor focus.
Strategic Investment Portfolio: +61% like-to-like growth across all four subsidiaries (TMC, Brillare, Axiom, IncNut), now 18% of domestic business. Individual brands at different growth stages; aggregate currently EBITDA neutral with path to high single-digit EBITDA margin at 3-year point.
International Business: -12% YoY due to West Asia conflict restrictions. Personal care (UAE/Germany/Thailand production) largely back to normal; OTC pain management sprays still pending ministry approvals to ship from India. Management expects significant recovery in Q3/Q4 FY27.
Company-Specific & Strategic Commentary
Category-wise Reporting Transition: Shifted from brand-wise to category-wise disclosure due to portfolio scale (10-12 brands, with more acquisitions in pipeline) and to align with industry practices.
Channel Transformation: Organized channels (MT + e-com + quick commerce) grew 19% like-to-like, now 32% of domestic business; quick commerce now 35% of e-com.
Three Strategic Tech Initiatives: Supply chain planning/inventory management upgrade for forecast accuracy and working capital; Sales Code.ai deployment for field force productivity; enterprise analytics hub for data/AI decision-making. All expected complete during FY27.
Repeatable Acquisition Model: Startups run independently with own CEOs, linked via central growth office (7-8 people). Active pipeline — management explicitly looking for 2-3 more acquisitions in parallel with consolidating current four.
Kesh King Revival: Degrowth arrested; mid-single-digit growth in Q1. New D2C launches planned; expecting double-digit growth by FY27 year end.
Gross Margin Discipline: Managed ~360bps input cost increase via measured price increases; expect to more than offset absolute input cost increase for the full year.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Strategic Investments Revenue | ₹750-800 crores for FY27 (vs ~₹160 cr Q1 run-rate) | Growth broadly sustainable; Q2/Q3 high season for TMC & Brillare (festive); Axiom juice mildly seasonal (7-8% of portfolio) |
| Effective Tax Rate | ~25-26% for FY27 | Normalized from fiscal benefits expiry; PAT will reflect higher comparable tax base |
| Gross Margins | Recover in coming quarters (H2 FY27) | Price increases to offset ~200bps conflict-related cost inflation; mix drag ~160bps from startups partially offset |
| International Business | Significant growth in Q3/Q4 FY27 | OTC shipment approvals pending from ministries; strategy realigned during disruption period |
| Kesh King | Double-digit growth by FY27 end | New launches in D2C space; existing range expansion plans |
| Talc Portfolio | Significant full-year recovery | Q1 already substantially higher; recovering to FY25 levels |
| Startup EBITDA Margins | High single-digit at 3-year point | Currently EBITDA neutral; rebalancing between growth investment and profitability |
| Core Business Growth | "Better numbers" in H2 FY27 | Domestic core ~6% in Q1 (ex-startups); improving visibility on discretionary consumption |
Risks & Constraints
| Risk | Context |
|---|---|
| West Asia Conflict | ~200bps gross margin dip from crude-linked input costs; international business down 12% due to inability to ship OTC pain management products from India ("hefty orders" pending ministry approvals). Management seeking approvals and realigning strategy; expects Q3/Q4 recovery but timing uncertainty remains. |
| Input Cost Inflation | Crude oil + packaging material cost increases made Q1 "one of the challenging cost environment for the sector in recent years." Mitigation: measured price increases already taken, further pricing actions planned; expect to more than offset absolute input cost increase in FY27. |
| Portfolio Mix Dilution | Startups (EBITDA neutral) growing 61% vs core ~6%, contributing ~160bps gross margin drag. Management maintains residual confidence margins won't decline, leaning on core pricing and startup path-to-profitability plans. |
| Tax Rate Normalization | From low-teens to ~29% in Q1 (normalizing to ~25-26% FY27) — structural earnings drag on PAT despite PBT growth of 4%. Management flagged as one-off normalization. |
| International Recovery Timing | Personal care (UAE, Germany, Thailand) largely resolved; OTC pain management sprays still pending approvals ~months; Q3/Q4 recovery predicated on resolving logistics/approvals. |
Q&A Highlights
Strategic Investment Portfolio Growth Engine
- Question: Where is the 61% like-to-like growth coming from across the four subsidiaries — is it sustainable or base-effect driven? (Abneesh Roy, Nuvama)
- Answer: Growth is across all four subsidiaries (volume and value), including PNC growing "well north of 20%"; Axiom engagement since 2023 has started paying off; management expects similar trajectory continuing — "this is quite sustainable" (Dhruv Aggarwal, Chief Growth Officer).
Category Reporting Rationale
- Question: Why move to category reporting (lumping seasonal talc with BoroPlus and Smart & Handsome)? (Abneesh Roy, Nuvama)
- Answer: Scale necessitates it — with 10-12 brands now and "more brands in the pipeline," brand-wise reporting is no longer feasible; clubbed per consumer/health logic (e.g., Zandu BALM under healthcare) (Mohan Goenka).
Input Cost Breakdown & Margin Recovery
- Question: How much of the margin impact is input cost vs. structural mix, and can pricing offset it? (Arnab Mitra, Goldman Sachs)
- Answer: Input cost up ~360bps — ~200bps from West Asia conflict, ~160bps from mix. Pricing should offset the conflict piece; mix is harder but being worked on. "Next three quarters should be relatively better than this." (Mohan Goenka)
Talc Pool Recovery
- Question: Given the low FY26 base, should talc recover to FY25 revenue levels? (Arnab Mitra, Goldman Sachs)
- Answer: Yes, confirmed — "substantially high numbers in this quarter for talc" and "significantly high numbers" for the full year; expects full recovery to FY25 levels (Mohan Goenka).
International Business Logistics
- Question: Have you found alternative logistics to bypass the Hormuz/conflict issue? (Arnab Mitra, Goldman Sachs)
- Answer: Personal care produced in UAE, Germany, Thailand is almost full restored; OTC pain management sprays from India still blocked — "hefty orders" waiting; seeking ministry approvals, expecting short-term movement; Q3/Q4 significant growth expected (Vivek Dhir, CEO International).
Startup Seasonality & Profitability Timeline
- Question: Is a quarterly ₹160 crores run-rate annualizable? What is aggregate EBITDA margin for strategic investments? (Harit Kapoor, Investec)
- Answer: Only Axiom (juices) has meaningful seasonality (~7-8% of portfolio); TMC/Brillare festive season ahead. Aggregated EBITDA is break-even. 3-year EBITDA target: high single-digit. Gross margins 55-70%+ across the four (TMC 60%+, Brillare/IncNut 70%+). (Dhruv Aggarwal, Mohan Goenka)
Other Income Jumps
- Question: What is the ₹53 crores Other Income on standalone basis? (Vaibhav Gupta, Bowhead)
- Answer: Includes ~₹32 crores dividend from an international subsidiary, eliminated on consolidation (Dhruv Aggarwal / Rajesh Sharma).
Kesh King & OTC Initiatives
- Question: Kesh King growth looks low despite low base; what initiatives are planned? Also, split between OTC and Medico approach? (Vaibhav Gupta, Bowhead)
- Answer: Kesh King is mid-high single-digit with double-digit expectation by year end; new D2C launches in pipeline. OTC: new positioning campaigns for Pancharishta and Nityam driving double-digit growth; winter preparation underway; rural sub-stockist consolidation for throughput. Medico: innovative launches, focus on top category-A doctors, gradual small-town expansion. (Mohan Goenka; Gul Raj Bhatia)
Balancing High-Margin Core vs. Low-Margin Startups
- Question: If the core is only ~6% and startups are low margin growing fast, how do you keep operating profit growing with revenue? (Kaustav Bubna, BMSPL)
- Answer: Don't worry about the full year — crude-linked pressure is short-term and being offset by aggressive price increases on core; all startups reduced losses YoY in Q1; committed to margins not declining (Mohan Goenka).
Core Business Growth Run-Rate
- Question: Ex-startups, domestic core looks ~3-6%; how does that trend for the year? (Kunal Vora, BNP Paribas)
- Answer: Domestic core grew ~6% in Q1; the drag is purely from international segment; expect "better numbers" on core going forward (Rajesh Sharma).
D2C Operating Model & Ownership
- Question: How are the four D2C subsidiaries run — independent, synergized, structure a year from now? (Percy Panthaki, IIFL)
- Answer: Independent CEOs; central growth office (7-8 people) provides shared services (content, strategy, e-com relationships, international support); knowledge sharing across companies; team based in Gurgaon with free hand to hire. Channel split: ~20% offline (Axiom strong offline), ~20-30% own assets, remainder via e-com/quick-platforms. (Dhruv Aggarwal, Mohan Goenka)
Key Takeaway
Emami delivered consolidated revenue of ₹1,039 crores (+15% YoY) in Q1 FY27 with domestic growth of +20% (like-to-like +12%, volumes +8%), led by the strategic investment portfolio (+61% like-to-like, ₹160 crores, now 18% of domestic business). Hair & Scalp Care grew 11% and OTC high-teens, while skincare (+3%) and healthcare (+2%) lagged; international declined 12% on West Asia conflict restrictions. EBITDA grew 6% to ₹226 crores despite ~360bps input cost inflation (200bps conflict-driven, 160bps mix), with PAT down 16% to ₹137 crores on tax normalization. Management guided strategic investments to ₹750-800 crores for FY27, expects Q3/Q4 recovery in international, has taken aggressive pricing to offset input costs, and targets break-even-to-high-single-digit EBITDA on startups over three years. Watch items: OTC shipping approvals, crude trajectory, and startup profitability timeline as the portfolio pivots from core-led to diversified growth.