Emami shares slip 6% as March quarter profit more than halves

Topics Emami | Buzzing stocks | Markets

The management feels that the demand for discretionary products could quickly come back to normal
Shares of Emami slipped 6 per cent to Rs 207 on the BSE on Monday after the company reported disappointing set of numbers for the quarter ended March 2020 (Q4FY20), impacted severely by the Covid-19 pandemic.

The personal products company’s profit before tax before exceptional items (PBT) declined by 70 per cent year on year (y-o-y) to Rs 25.37 crore in Q4FY20, from Rs 84.77 crore in Q4FY19. Profit after tax during the quarter under review more-than-halved to Rs 23.36 crore from Rs 56.15 crore.

The company’s net sales decreased 17.7 per cent y-o-y at Rs 522.8 crore. Ebitda (earnings before interest, taxes, depreciation and amortization) margins contracted sharply by 563 bps y-o-y to 18.8 per cent from 24.4 per cent in the year-ago quarter.

The management said the business environment that was already facing challenges from weak consumption trends and liquidity concerns was further impacted severely by the Covid-19 pandemic. The pandemic and the lockdown led to a sharp decline in consumption due to rising unemployment and a significant drop in demand from low-income groups.

The pandemic also led the consumer shift towards more essential items like food, groceries and hygiene products thereby affecting the sale of the Company’s niche and discretionary line of products. All these developments arising out of an unprecedented and extraordinary environment that prevailed across the globe, impacted the Company’s performance significantly in Q4FY20, it said.

While the company has already forayed into hand sanitizer, soaps and hand washes under the Boroplus brand and few other products in health care under Zandu, the company is aggressively pushing to launch more products in both personal hygiene and healthcare categories in the next one-two months. This apart, as the current situation is gradually improving to reach normalcy, the management feels that the demand for discretionary products could quickly come back to normal.

 


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