CARE Ratings has reaffirmed the CARE AA+; Stable / CARE A1+ ratings for Emami Limited’s bank facilities. These ratings reflect Emami’s established presence in the FMCG industry, supported by experienced promoters, strong brands, and wide distribution channels. The company’s robust financial performance in FY25 and strategic brand investments also contributed to the reaffirmed ratings. A slight moderation in performance is expected to recover in H2FY26.
Credit Ratings Reaffirmed
CARE Ratings Limited has reaffirmed the credit ratings for Emami Limited’s bank loan facilities at CARE AA+; Stable / CARE A1+. The rating agency also withdrew the rating assigned to the commercial paper issue, as there is no outstanding amount.
Key Rating Drivers
The ratings are underpinned by Emami’s established position in the Fast-Moving Consumer Goods (FMCG) sector. Key factors supporting the ratings include:
- Established brands in the ayurvedic and herbal personal care/cosmetic product segments.
- Regular investment in brand strengthening and inorganic growth.
- Wide marketing and distribution channels.
- Strong research and development (R&D) capabilities.
Financial Performance
Emami demonstrated robust financial performance in FY25, with growth in total operating income (TOI) and healthy profitability. However, a slight moderation in TOI and operating margin was observed in H1FY26 due to weather conditions affecting summer product demand and GST-related trade disruptions. Performance is expected to improve in H2FY26. The company’s capital structure, liquidity, and debt coverage indicators remain strong.
Rating Sensitivities
Factors that could lead to a positive rating action include:
- Substantial growth in scale of operations and revenue diversification.
- Maintaining significant free liquidity.
- Reducing pledge of promoters’ share in EL.
Negative factors include:
- Moderation in return on capital employed (ROCE) below 20%.
- Overall gearing exceeding 0.50x.
- Material increase in the percentage of pledged promoter shares.
Outlook
The outlook is ‘stable,’ reflecting expectations that Emami will sustain its healthy business risk profile and financial performance, supported by its established brands and low reliance on external debt.
Source: BSE
