# 1. Financial Performance ## A. Key Figures * **Consolidated Revenue:** **₹799 Cr** (-10% YoY) * **EBITDA:** **₹179 Cr** (-29% YoY) * **PAT:** **₹148 Cr** (-30% YoY) * **Gross Margin:** 71% (stable) * **Interim Dividend:** **400%** (₹4/share) for FY26 ## B. Revenue Decline * **Tough Base Effect:** Revenue decline driven by **15% drop in domestic business**, reflecting a challenging YoY comparison from last year’s record Q2 in talc and prickly heat powder categories. ## C. Margin Stability * **Margin Recovery Expected:** Gross margin held firm at 71% on cost discipline; EBITDA and net margin seen rebounding strongly in Q3 as Q2 operating deleverage unwinds. ## D. Profit Drop * **Profit Pressure Transient:** Double-digit EBITDA and PAT declines attributed to temporary top-line softness, not structural margin erosion. ## E. Dividend Payout * **Sustained Shareholder Returns:** Board maintained capital return discipline with a 400% interim dividend, signaling confidence in long-term cash flow resilience. --- # 2. Volume & Pricing Trends ## A. Key Figures * **Domestic Volume:** **~16% decline** (QoQ, one-off) * **Grammage Increase:** **~90% of portfolio** impacted · **20% of portfolio** with higher grammage/ML (sachets) * **MRP Reduction:** **INR 250 Cr** total reduction in domestic portfolio ## B. Volume Recovery * **Temporary Volume Dip:** Domestic volumes down sharply on a one-off basis, with management expecting recovery in H2 excluding lost summer portfolio. ## C. Grammage Increases * **Pricing Strategy Shift:** Grammage increases deployed across vast majority of portfolio as GST-driven alternative to price hikes, concentrated in small SKUs and sachets. * **Minimal Volume Impact:** Higher sachet weights unlikely to affect unit sales due to single-use nature of key brands like Navratna. ## D. MRP Reductions * **Consumer Relief, Delayed Impact:** Significant MRP cuts rolled out, but full benefit awaits inventory turnover; mixed stock availability currently clouds consumer response. ## E. Rural Demand * **Rural Momentum:** Positive demand trends firming across categories, led by strong rural shampoo growth via Kesh King sachets. --- # 3. Channel & Distribution ## A. Key Figures * **International Business Growth:** **8%** (primary sales) * **E-commerce Contribution (Quick Commerce):** **14%** of e-commerce * **Domestic Consumer Business in Quick Commerce:** **~11%** each * **Nepal International Growth:** **>100%** despite regional disturbances * **SAARC Markets Growth:** **>22%**, led by Bangladesh * **GCC & MENA Markets:** Flat (mixed regional performance) ## B. Modern Trade * **Strategic Growth Recovery:** Portfolio shows strong rebound with **quarter-on-quarter improvement**, driven by low base effects and **on-ground execution momentum**. * **Channel Prioritization:** Distribution strategy remains focused on modern trade, e-commerce, and quick commerce, reflecting structural shifts in consumer behavior. * **Traditional Channel Strength:** Maintains robust presence in traditional retail with active investment in availability and distribution, tracking with category growth. ## C. Quick Commerce * **High-Growth Channel:** Quick commerce, D2C sites, and marketplaces are key growth drivers, though **GST-related disruptions** temporarily constrained inventory at a major marketplace. * **E-commerce Mix:** Quick commerce now represents a **significant 14%** of e-commerce sales, with domestic consumers forming a core part of the segment. ## D. International Channels * **Resilient Global Performance:** International business delivered **modest but stable growth** amid macro and geopolitical headwinds, supported by localized innovation and portfolio relevance. * **Outperformance in SAARC:** Region grew **over 22%**, with Bangladesh leading and Nepal achieving **triple-digit expansion** despite adverse conditions. * **Regional Divergence:** GCC and MENA remained flat due to challenges in Egypt and Bahrain, though other markets in the region showed positive traction. * **Pipeline-Driven Outlook:** Upcoming **new product developments (NPDs)** expected to strengthen international portfolio and support future growth. --- # 4. Brand & Product Performance ## A. Key Figures * **Medico Business Growth:** **8%** QoQ increase ## B. Kesh King Relaunch * **Strategic Rebranding:** Kesh King relaunched as Kesh King Gold with a **"Ayurveda plus science"** positioning to counter D2C competition and align with shifting consumer preference for efficacy-driven, clinically backed formulations. * **Science-Backed Reformulation:** Product enhanced with **Gro Biotin** and **plant-based Omega 369**, supported by 9–10 months of research and fully clinically proven claims across all Zandu products. * **Launch Execution:** Despite GST-related delays, new formulation launched last month and is **well received in early market feedback**, with a major advertising campaign set to amplify reach. ## C. Smart & Handsome * **Brand Expansion:** Rebranded from Fair and Handsome to position as a **complete men’s grooming platform**, with 12 new products introduced and initial rollout on one e-commerce platform. * **Limited Rollout, High Optimism:** Currently in test marketing phase with **no wide rollout on other e-com or modern trade**, but internal sentiment is very positive; expected to operate in distinct segments without cannibalizing TMC. ## D. New Product & Communication Strategy * **Growth Enablers:** Performance driven by **new brand communications** and a scaled **influencer flywheel**, contributing to strong momentum in focused categories. * **Category Strength:** **Cough syrups, honey**, and the **D2C platform Zandu Care** delivered solid growth despite headwinds from GST reductions, underscoring resilience in key segments. --- # 5. Input Cost & Demand Risks ## A. Key Figures * **GST Impact:** **88%** of core domestic portfolio benefited · **93%** of portfolio now under 5% GST rate ## B. GST Disruption * **Structural Benefit:** GST reform is **materially positive** for Emami, with nearly all core products now in the 5% tax bracket, enhancing affordability and competitive positioning. * **Consumer-First Response:** Full GST benefit passed to consumers, reducing domestic MRP by **~₹260 Cr**, reinforcing value leadership and expected to stimulate demand in balms and oils. * **Near-Term Disruption:** Temporary trade and consumer deferral caused **Q2 sales moderation**, but recovery is underway with strong rebound in **October and early November**, including in affected categories. * **Confidence in Recovery:** Management expects **full volume recovery in Q3**, supported by delayed shipment clearance and restocking momentum. ## C. Summer Losses * **Seasonal Headwind:** Summer portfolio underperformed with **irreversible 4–5% loss** in Q2 due to missed winter product loading, pressuring near-term volumes. ## D. Consumer Elasticity * **Demand Shift:** Facing structural decline in face cream category, prompting **strategic diversification** into new segments to offset volume softness and sustain growth trajectory. * **Cautious Pricing Stance:** Demand elasticity post-GST remains uncertain; any future **price adjustments or rollbacks** will be data-driven and contingent on observed consumer response over coming quarters. --- # 6. Guidance & Outlook ## A. Key Figures * **H2 Growth Outlook:** **Double-digit growth** expected in second half · **Highest sequential growth in 6 quarters** achieved * **Sales Outlook FY27:** **Significantly better than FY26** anticipated ## B. H2 Recovery * **Strong Seasonal Rebound:** H2 off to a robust start with healthy trade sentiment and exceptional winter loading recovery across key regions, driving better-than-expected performance. * **Pipeline Normalization:** GST-related trade pipeline expected to fully recover in Q3, supporting strong H2 volume momentum. * **Margin Tailwinds:** Input cost stability positions the company for margin recovery and expansion in the second half. * **Category Scaling:** Management bullish on current quarter, actively scaling high-potential segments including the **Chyawanprash range**. ## C. Winter Demand * **Early & Favorable Winter:** Winter onset in North India ~2 weeks earlier than usual, enabling early sales capture amid strong trade buoyancy. * **Extended Seasonality:** Company well-prepared to leverage winter demand not only in Q3 but also into Q4, as recent trends show prolonged winter cycles. * **Growth Determinant:** Full-year growth hinges on winter performance—potential for double-digit expansion if current momentum sustains. ## D. FY27 Expectations * **Profitable Growth Trajectory:** FY27 expected to deliver robust and profitable growth, underpinned by favorable seasonality, GST normalization, organized channel expansion, and cost leadership. * **Structural Growth Drivers:** Lower base in FY26 and GST rate cut expected to boost consumer demand and drive share gains from unorganized players. ## E. Double-Digit Growth * **H2 Acceleration Confirmed:** Business projected to grow at strong double-digit pace in second half, outpacing first half, fueled by increased brand investments in **Brillare and TMC**. * **Q3 Confidence with Caution:** Management confident in double-digit Q3 growth if winter trends hold, though full impact remains to be seen.