Low valuations don't make Emami a cool bet; investors advised caution

In the past 1-2 years, Emami has seen muted volume off-take, thanks to higher dependence on wholesale distribution and competitive pressures

Developments such as those related to share buyback (announced last month) and the Emami promoter’s deal to sell the cement business to Nirma group, have given a fillip to the Emami stock of late.

After seeing a sharp 68 per cent erosion in market capitalisation in the last two financial years, on account of business pressure and promoter share pledging concerns, the stock has gained 16 per cent in FY21 so far, outperforming the 5 per cent rise in the Nifty FMCG index.

Notwithstanding the attractive valuation of 16x its FY21 estimated earnings, there are potential risks that could weigh on investor