Emami Ltd has announced a ₹282 crore open-market share buyback at ₹475 per share, offering support to shareholders amid challenging market conditions. According to reports from The Economic Times, the buyback covers up to 5.937 million shares, representing 1.36% of its capital. The stock has declined more than 30% over the past 12 months, while the Nifty FMCG index has fallen around 20% over the same period. Emami shares closed at ₹372.65 on Thursday. As per Bloomberg data, the stock currently trades at 22 times FY28 earnings, which analysts consider not demanding given the recent underperformance.
Despite revenue growth, Emami's profitability metrics have come under pressure. In the June quarter (Q1FY27), consolidated revenue rose 15% year-on-year to ₹1,039 crore, but Ebitda grew at a slower 6% to ₹226 crore, pulling the margin down to 21.8% from 23.7% in Q1FY26. Gross margin also declined to 65.8% from 69.4%. The domestic business, which accounts for around 88% of revenue, faced challenges with international revenue declining 12% last quarter due to West Asia conflict disruptions. According to Nuvama Institutional Equities analysts, the company expects revenue growth at about 25% year-on-year in Q2FY27, led by M&A and D2C initiatives, with core growth of around 18% on a soft base.
Emami's strategic portfolio has emerged as a key growth driver, contributing 18% of domestic sales in Q1FY27 and achieving 61% like-for-like growth with revenue of ₹160 crore. According to The Economic Times, the company has expanded through strategic investments in The Man Company, Brillare and Axiom Ayurveda, which are now subsidiaries. Management expects the portfolio to reach ₹700-800 crore in FY27. The strategic investments currently contribute around 6% of consolidated turnover, with projections to scale to approximately 25% by FY30. As per Nuvama Institutional Equities, the company's D2C footprint extends into traditional segments through platforms such as Zanducare, while the strategic investments division remains the main vehicle for digital-first D2C bets.
While D2C investments show strong growth, profitability remains a concern. Strategic investments Ebitda is around breakeven, despite gross margins above 50% for most businesses and above 70% for Brillare and IncNut. Nuvama Institutional Equities analysts expect D2C Ebitda losses to narrow to -3% to -4% in FY27 from -18% to -20% last year, targeting 8%+ Ebitda margin over the next two years. The analysts noted that while the impact on per-share metrics remains modest, the buyback is positive as it reflects capital distribution to shareholders. The company's recovery will depend on effective execution of D2C investments and conversion of growth into margin accretion, with a recovery in the international business also being a key factor to watch.
