Current Rating and Its Significance
MarketsMOJO’s 'Sell' rating for Emami Ltd. indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This rating is derived from a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall assessment of the stock’s potential risk and reward profile in the current market environment.
Quality Assessment
As of 28 December 2025, Emami Ltd. maintains a good quality grade. The company has demonstrated steady, albeit modest, growth over the long term. Net sales have increased at an annualised rate of 7.72% over the past five years, while operating profit has grown at a more robust 15.10% annually. These figures suggest that the company’s core business operations remain fundamentally sound, supported by a consistent demand for its FMCG products.
However, recent quarterly results have shown signs of strain. The profit after tax (PAT) for the quarter ended September 2025 fell sharply by 30.2% to ₹148.35 crores, while net sales dropped to ₹798.51 crores, marking the lowest quarterly sales in recent periods. Return on capital employed (ROCE) also declined to 28.04%, signalling reduced efficiency in generating returns from invested capital. These developments temper the otherwise solid quality profile and highlight near-term challenges.
Valuation Considerations
Currently, Emami Ltd. is considered expensive based on valuation metrics. The stock trades at a price-to-book value of 7.6, which is high relative to typical FMCG sector valuations. Despite this, the price-to-book ratio is broadly in line with the company’s historical peer averages, indicating that the market has priced in expectations of sustained profitability and brand strength.
The company’s return on equity (ROE) stands at a healthy 25.7%, reflecting strong profitability relative to shareholder equity. Nevertheless, the elevated valuation multiples suggest limited margin for error, especially given the recent downturn in profits and sales. Investors should be mindful that paying a premium for the stock increases the risk if the company’s financial performance does not improve.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend Analysis
The financial trend for Emami Ltd. is currently negative. The latest data as of 28 December 2025 shows that the company’s profits have declined by 3.1% over the past year, while the stock itself has delivered a negative return of 12.39% during the same period. This underperformance extends to shorter time frames as well, with the stock down 7.95% over three months and 10.58% over six months.
Long-term growth has been modest, and recent quarterly results have been disappointing, reflecting challenges in maintaining sales momentum and profitability. The company’s underperformance relative to the BSE500 index over one year, three years, and three months further emphasises the subdued financial trajectory. These trends suggest that investors should exercise caution and closely monitor the company’s ability to reverse these declines.
Technical Outlook
From a technical perspective, Emami Ltd. is rated bearish. The stock price has been trending downward, with a one-day decline of 0.6% and a one-week drop of 1.09% as of 28 December 2025. This negative momentum is consistent with the broader financial and valuation concerns, signalling that market sentiment remains weak.
Technical indicators suggest limited near-term upside, and the bearish trend may continue unless there is a significant improvement in fundamentals or positive catalysts emerge. Investors relying on technical analysis may view this as a signal to avoid initiating new positions or to consider exiting existing holdings.
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Implications for Investors
For investors, the 'Sell' rating on Emami Ltd. reflects a combination of factors that suggest caution. While the company retains good quality characteristics, the expensive valuation, negative financial trends, and bearish technical signals collectively point to limited upside potential and elevated risk in the near term.
Investors holding the stock may consider reassessing their positions in light of these factors, especially given the recent decline in profitability and sales. Prospective buyers should weigh the premium valuation against the current challenges and monitor for signs of operational turnaround before committing capital.
Overall, the MarketsMOJO rating serves as a guide to help investors navigate the complexities of Emami Ltd.’s current market standing, emphasising the importance of a holistic approach that integrates quality, valuation, financial health, and technical momentum.
Summary of Key Metrics as of 28 December 2025
- Mojo Score: 30.0 (Sell Grade)
- Market Capitalisation: Smallcap
- 1-Year Stock Return: -12.39%
- 5-Year Net Sales Growth (CAGR): 7.72%
- 5-Year Operating Profit Growth (CAGR): 15.10%
- Quarterly PAT Decline: -30.2% (₹148.35 crores)
- ROCE (Half Year): 28.04%
- ROE: 25.7%
- Price to Book Value: 7.6
These figures illustrate the current challenges and valuation concerns that underpin the 'Sell' rating, providing a data-driven foundation for investment decisions.
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