India Ratings has affirmed Emami Limited’s long-term bank loan facilities rating at ‘IND AA+/Stable’ and short-term rating at ‘IND A1+’. The ratings reflect Emami’s strong business profile, supported by its leading market position, geographical diversification, and marketing and distribution networks. The company’s financial profile is supported by its robust cash flow generation, resulting in a strong balance sheet with net cash position.
Rating Rationale
India Ratings and Research (Ind-Ra) has assigned and affirmed Emami Limited’s bank loan facilities ratings. The rating affirmation reflects Emami’s strong business profile and leading market position across various niche product categories, geographical diversification across domestic and international markets, and strong marketing and distribution networks. The company’s value chain strength is evidenced by its ability to sustain strong EBITDA margins despite fluctuations in raw material costs.
Key Rating Drivers
The ratings are supported by the company’s strong market position across product categories and strength in value-chain resulting in industry leading margin profile. Emami also has a strong distribution network and is increasing its omni-channel presence. The company is likely to maintain revenue growth over the medium term, with an increasing share of international business. Emami also focuses on strategic acquisitions and maintains a healthy balance sheet across business cycles, with a net cash position likely over the near term.
Financial Highlights and Outlook
Emami’s consolidated revenue has expanded at a compounded annual growth rate (CAGR) of 14% over the past two decades. In FY25, the revenue grew to INR38 billion. Emami’s international business contributed 17%-18% to its revenue. Emami has a net cash of around INR6.3 billion as of FYE25. The management intends to maintain a debt neutral balance sheet.
Rating Sensitivities
Positive rating triggers could include a significant and sustained increase in scale and diversification, leading to a strengthening of the business profile while maintaining profitability and credit metrics. Negative rating triggers include a significant reduction in EBITDA or large acquisitions/capex/investments resulting in the net leverage increasing beyond 1x.
Source: BSE
