Gross margin expanded 260 bps to 61.4%, led by benign RM prices. However, higher ad spends (up 250 bps y-o-y) and other expenses (up 10 bps) restricted Ebitda margin expansion to 20 bps y-o-y to 15.6%. Thus, Ebitda posted a healthy 26.7% y-o-y growth to R75 crore. Lower depreciation (writeback of R47.7 crore), higher other income (up 37.4%) and lower interest costs (down 30.8%) aided the PBT growth of 31.1%. However higher tax rate (up 960 bps to 23.1%) due to certain deferred taxes dragged the PAT growth to 16.6% to R70.7 crore.
Domestic revenues grew 19.7% y-o-y with broad-based growth across power brands Navratna Oil, Balms and Fair & Handsome grew 14%, 13% and 14%, respectively.
We upgrade our estimates by 2-5% to factor in Q1 beat. Near-term expected margin disruption notwithstanding, the runway for growth in the medium term looks attractive as it scales up new products. Emami remains our top pick in the tier-II consumer space along with Britannia. Maintain buy, with a target price of R600.