Emami share price hits 52-week low despite Dermicool acquisition; here’s why, should buy, sell, hold?

Emami share price fell to a fresh 52-week low of Rs 442 apiece on BSE on Monday, after the company announced the acquisition of Dermicool from Reckitt for Rs 432 crore. “Weak global sentiment, margin pressure on FMCG sector due to higher oil prices have led to Emami stock price at a 1-year low despite a good acquisition,” Pavitraa Shetty, Co-founder & Trainer, Tips2Trades, told FinancialExpress.com. The stock price has surpassed its previous low of Rs 446 apiece touched on 7 March 2022. Shetty added that technically, 442 remains strong support. “A close below this level could even lead to 420 on the lower side. 458 remains a strong resistance,” she said. The company said the acquisition is funded through internal accruals and is subject to customary closing conditions.

Should you buy, sell or hold Emami stock?

Zandu, Kesh King and German brand Creme 21 are some of the brands or businesses acquired by Emami in the past few years. Combined with Emami’s Navratna Cool Talc, Emami will become a leader in this niche category, which would also help realise synergetic benefits and optimize costs, Emami, Motilal Oswal Financial Services said in a note. “The acquisition of Dermicool could be a positive as it catapults Emami to the position of market leader in a niche category and goes on to strengthen its Summer portfolio,” it said.

The brokerage firm has recommended to buy Emami stock with a price target of Rs 540, potential upside of 20 per cent from last close. It believes that the acquisition came at an opportune time with the summer season having begun early in CY22.

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Analysts at Prabhudas Lilladher have given ‘accumulate’ rating to the stock, and have pegged a target price of Rs 607 apiece, a rally of 35 per cent from the previous close. Analysts believe that the move is positive, but not a game changer as it does to change the seasonality impact in the company. “Near term growth remains a concern given slowdown in rural demand and sharp jump in input costs in the past month,” they said.

(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)