Emami Q2 profit falls 2% as input costs squeeze margins, tax outgo surges

Emami's consolidated net profit declined 1.9% year-on-year to ₹145.5 crore in the September quarter, as higher input costs squeezed operating margins and a sharp increase in tax expense offset growth in revenue and operating profit. Revenue from operations rose 36.2% to ₹1,087.65 crore, while EBITDA increased 24.5% to ₹222.32 crore. However, the EBITDA margin contracted 200 basis points to 20.4%, while tax expense surged to ₹48.12 crore from ₹1.83 crore in the year-ago quarter.

Profit attributable to equity holders of the parent stood at ₹144.16 crore, down 2.8% from ₹148.35 crore a year earlier. Profit before tax, however, increased 28.9% to ₹193.62 crore.

The increase in tax expense was also influenced by a favourable base in the year-ago quarter, when Emami recognised a minimum alternate tax (MAT) credit entitlement of ₹27.36 crore. In the latest quarter, the company utilised MAT credits worth ₹11.82 crore against its tax liability.

Revenue growth led by domestic volumes

Revenue from operations rose to ₹1,087.65 crore from ₹798.51 crore in Q2 FY26. However, on a like-to-like basis, after adjusting for the consolidation of Axiom Ayurveda and IncNut Digital, revenue growth stood at 24%.

Domestic business grew 49% on a reported basis, with volume growth of 43%. On a like-to-like basis, domestic revenue increased 32%, while volumes rose 26%.

Among the categories, skin care revenue grew 31% to ₹191 crore, while hair and scalp care increased 30% to ₹194 crore. Health care revenue rose 11% to ₹284 crore. The strategic investments portfolio grew 73% on a like-to-like basis to ₹239 crore and contributed around 26% of domestic business.

International business remained under pressure, with reported revenue declining 2% to ₹171 crore. Excluding Nepal and Iraq, however, it grew 6%.

Higher input costs squeeze margins

EBITDA increased to ₹222.32 crore from ₹178.53 crore, but the margin contracted to 20.4% from 22.4%. Material costs rose to 34.2% of revenue from 29%, reflecting elevated input-cost pressure.

"Despite elevated input costs, we delivered EBITDA growth of 25% to ₹222 crore through disciplined execution, calibrated pricing actions and sustained productivity improvements," Mohan Goenka, Vice Chairman and Whole-Time Director, said.

The board declared an interim dividend of ₹5 per equity share, with November 13 fixed as the record date and payment scheduled on or before December 4.

Emami shares closed 1.48% higher at ₹387 on the NSE on Thursday, against the previous close of ₹381.35, despite the decline in quarterly net profit.