Emami shares remain under watch as brokerage Prabhudas Lilladher maintained a 'Hold' rating, lowering earnings estimates for FY27 and FY28. While the company reported 15% revenue growth in Q1 FY27, net profits fell by 15.4% due to rising input costs and international business struggles.
Emami Limited continues to navigate a challenging phase as brokerage firm Prabhudas Lilladher has reiterated its 'Hold' rating on the stock. The brokerage has lowered its earnings per share (EPS) estimates for FY27 and FY28, citing ongoing pressure on profit margins. This cautious stance follows the company’s first-quarter financial results for FY27, released on August 4, 2026, which revealed a mixed performance for the consumer goods major.
The company reported a consolidated revenue of ₹1,039 crore for the first quarter of FY27, marking a 15% increase compared to the same period last year. However, the topline growth did not translate into higher profits. Consolidated net profit for the quarter declined by approximately 15.4% to ₹139 crore. This drop in profitability was largely driven by a contraction in profit margins, with gross margins falling 360 basis points to 65.8%.
Rising costs for raw materials and packaging, coupled with inflationary pressures, have squeezed the company’s ability to protect its bottom line. Additionally, the international business division, which has historically been a significant contributor, faced a 12% decline in sales. This drop is attributed to geopolitical disruptions in the West Asia region, which continue to impact operations.
While the overall profit figures were weak, there were pockets of growth. The domestic business expanded by 20%, showing resilience in consumer demand. Furthermore, Emami's strategic investments in newer brands, such as Axiom Ayurveda and IncNut Digital, have gained momentum, with the Direct-to-Consumer (D2C) segment registering a 61% year-on-year growth. However, investors are noting that these new-age segments often operate on lower profit margins compared to the company’s legacy products, which adds another layer of complexity to the overall margin outlook.
Emami is currently focusing on expanding its modern trade footprint and scouting for potential acquisitions to strengthen its portfolio. The stock, which has been trading in the ₹392-398 range, reflects the market's cautious sentiment regarding these margin headwinds.
For investors, the key area to monitor in the coming quarters will be the company’s ability to recover profit margins. The management's success in managing input cost volatility, stabilizing international sales amid geopolitical uncertainty, and balancing the growth of lower-margin D2C brands with overall profitability will be crucial factors in determining the company’s financial trajectory.