Ladies and gentlemen, good day and welcome to the Emami Ltd Q2 FY26 earnings conference call hosted by IIFL Capital Services Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Percy Panthaki from IIFL Capital Services Ltd. Thank you, and over to you, sir. Hi everyone, good evening. It's our pleasure to hold the Q2 FY2026 conference for Emami. On call with us, we have Mr. Mohan Goenka, Wholetime Director and Vice Chairman, Mr. Vivek Dhir, CEO, International Business, Mr. Gul Raj Bhatia, President, Healthcare, Mr. Manish Gupta, President, Sales, Mr. Giriraj Bagri, Chief Growth Officer, and Mr. Rajesh Sharma, President, Finance and IR. I'll now hand over the call to Mr. Goenka, who will take you through the results. Over to you, sir. Thank you, Percy. A very good afternoon, ladies and gentlemen. Thank you for joining us today for the Emami Ltd Q2 FY2026 earning call for the quarter, and half year ended 30th September 2025. This quarter, we have seen a transformational policy development by the government of India to reduce GST rates across key FMCG categories. This is a landmark reform aimed at enhancing affordability, improving consumer purchasing power, and ultimately stimulating broad-based consumption across both urban and rural India. For Emami, this reform is structurally positive, as nearly 88% of our core domestic portfolio benefited from the reduction in GST from 12% or 18% to now 5%, taking our total 5% rate GST portfolio coverage to around 93%. In keeping with our consumer-first philosophy, we swiftly passed on the benefits of this rate cut, reinforcing our commitment to value-driven affordability and accessibility. While this reform lays the foundation for long-term demand acceleration, its implementation caused temporary trade disruptions in September. Trade channels and consumers deferred purchases in anticipation of lower MRPs, while distributors focused on liquidating higher cost inventory, resulting in a short-term moderation in sales. The timing of the GST rate change also coincided with the peak winter pipeline build-up, leading to a deferment in our winter portfolio loading. Additionally, our summer portfolio faced the second challenging quarter due to heavy rains, which significantly impacted category demand, particularly for talc and prickly heat powders. Given that we had recorded our highest-ever sales in the second quarter for talc and prickly heat powder category last year, the combination of a softer market and a high base resulted in a steep year-on-year decline this quarter. As a result, consolidated revenues at INR 799 crore declined by 10% this quarter, led by a 15% decline in domestic business. However, excluding the GST rate-affected categories, some of our non-GST rate-impacted portfolio delivered encouraging growth, with Medico range up by 8%, Zandu Cough Syrup by 43%, Honey by 36%, and Zandu Care growing by 17%. Our strategic investment portfolios also rebounded with a 16% growth on a year-on-year basis and 36% on a sequential basis, reflecting improved performance across key focus areas. Our strategy of purposeful innovation and premiumization continues to gain traction. Last year, we took a bold step by transforming Fair And Handsome into Smart And Handsome, positioning it as a complete men's grooming brand. This quarter, we deepened that journey by launching 12 new products across different categories. Our initial rollout across modern trade and e-commerce platform has been encouraging. We also recently undertook the strategic relaunch of Kesh King as Kesh King Gold, based on deep consumer research, which revealed a shift in expectations. While our Ayurvedic heritage continues to be our biggest strength, today consumers also seek the added assurance of science and proof of efficacy. This insight inspired us to evolve Kesh King proposition to Ayurveda plus science, to build on our legacy while enhancing credibility and relevance among modern consumers. Our international business delivered a steady 8% growth despite persistent macro and geopolitical headwinds. Our approach remains one of strategic focus, combining portfolio relevance, market-specific innovation, and localized execution excellence to drive sustained value creation globally. On the financial front, gross margins remain stable at 71%, underscoring our cost discipline and input price stability. EBITDA for the quarter stood at INR 179 crores, declining by 29%, and PAT at INR 148 crore, declined by 30%, reflecting the temporary impact of lower top line. The Board of Directors also declared an interim dividend of 400%, amounting to INR 4 crore per share for FY2026. Looking ahead, I am pleased to share that October has witnessed a healthy rebound in trade sentiments, with the deferred winter loading being recovered, placing us on a strong footing for the second half of the year. We remain optimistic about a robust and profitable second half, supported by a favorable winter season, the normalization of the trade post-GST reform, and the positive impact of our strategic interventions. The continued expansion of organized channels, combined with our operational agility and cost leadership, further reinforces our confidence. Together, these levers position us well to deliver sustained profitable growth in the second half, while strengthening the foundation for long-term value creation and market leadership. With that, I would now like to open the floor for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may please press star and one to ask a question. The first question is from the line of Percy Panthaki of IIFL Capital Services. Please go ahead. Hi sir, can you tell us a little more about the Navratna relaunch? Apart from the name change, what else have you changed in the marketing mix? It is not Navratna, Percy. It is Kesh King. Sorry, sorry, Kesh King, yes. Yeah, yeah. So Kesh King is a pure, was a pure Ayurvedic-based product. Of course, we added science to Ayurveda. That was, we enhanced the, we upgraded the formulations with some ingredients like Grobiotin and Plant Omega 369, which are scientifically proven ingredients, you know, to enhance the results. So it is a pure now Ayurveda and science-backed formulation. That has benefited. We launched it last month. I think it has been well received in the market. Of course, it will be backed up by a huge advertising campaign. Because of the GST disruptions, the launch got a little delayed, but now we are absolutely on it. Will the new formulation be part of the communication message? Absolutely, 100%. Got it, got it. Yeah, operator, I think we can take questions from the queue. Thank you very much. The next question is from the line of Nitin Gupta from Emkay Global. Please go ahead. Thanks for taking my question. The first question is around this GST-driven de-stocking of 4% in Q2. I just wanted to gauge, like, is it fully, can it be fully recovered in Q3, or do you expect it to take some time? Nitin, we are very confident that it will be recovered in Q3. We have seen a bit of recovery in October itself because we could not load it in the last days of September, which got loaded in October. Based on your initial comments around the Kesh King, you have highlighted shift in expectations. Like across multiple companies reporting results, like HUL has highlighted, we are sort of driving the growth in FMCG where they are looking to align the portfolio. Given we have the higher salience of our portfolio in rural, would you like to offer any comment like how the consumption trend are shaping up in rural market? Definitely, Nitin. I think recently we have seen good demand coming from the rural side for all our categories. As far as Kesh King is concerned, we are really focusing on the shampoo sachets, particularly to drive the growth of the sachets. That was part of the strategy, and we are seeing excellent results from that, driving growth in rural markets for sachets, in shampoo particularly. Okay, thank you. With respect to Smart And Handsome, we are extending to multiple categories. Do we see the core face cream categories under structural pressure? Additionally, I just wanted to gauge, given we are positioning this brand in modern trade and e-commerce, are we going to see any cannibalization risk for TMC? Not really. These are absolutely at different price points and different categories altogether. It will not compete with The TMC. Definitely, yes, there is a structural shift. That is why such bold steps are being taken. Face cream demand is not as high as it used to be, but with these new offerings, I am sure overall we are going to gain. Sure, this is helpful. Lastly, if you can throw some comments around your winter loading now and how you think the winter is shaping up. Thank you. Winter has set in exceedingly well across, particularly the north, eastern, and also the western central side. The loading has been, of course, more than expectation because we could not load in the month of September, but October has been an excellent start. This year we are expecting good winters, so we are well prepared and geared for that. Sure, sir. Thank you. Thanks a lot and all the very best. Thank you. Participants, to ask a question, you may press star and one. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Hi, good evening. My first question was on the edge too. If you look at quarter three, you have a couple of elements which affected you in quarter two, almost entirely coming back, which is the - 4% on the GST impacted portfolio and another - 4% on the winter loading. I just wanted to get your sense about, do we see this kind of strong double-digit growth number because some of these impacts in Q2 stayed away or coming in Q3 itself? That is the first question. In addition to that, in this year - 10% number for the consolidated revenue, how much would have been the volume decline? That is my first question. Harit, definitely we're seeing the second quarter, we lost significantly for our summer portfolio also, which I mentioned. This was roughly around 4%-4.5%. Okay. And almost 4%-4.5% was because we could not load the winter products. What we have lost in the summer, of course, can't be made up in these quarters. The winter loading has, as I said, we have tried to do as much as possible in the month of October, and distributors have received it quite well. I am very confident that the third quarter will definitely, we will see a better result, much better than what we have seen in the past. I am definitely expecting close to double digit, but definitely high single digit is 100% on the cards. Got it. Got it. On the volume growth, what would be the volume decline? What would be that number broadly? If you can just tell me the pricing impact in the total revenue either way. Total volume decline in the domestic business was roughly around 16%. Got it. Got it. This was, Harit, the one-off quarter. Okay. Yes, of course. It should not be because there are multiple reasons. I'm very sure we're going to bounce back in the second half, other than the summer portfolio that everyone has lost. Got it. The second thing was on the strategic investment. Sorry, I can't hear you. I can't hear you. Yeah, can you hear me now? Is this better? Yeah, yeah. Yeah, the second thing was on the strategic investments portfolio. It's been a strong growth recovery in this portfolio. Just wanted to get a sense of quarter on quarter also, have you seen this improvement? Is it driven by a little bit of a low base also, which would have benefited? If yes, this on-ground improvement, I mean, what's really driven it? I remember last quarter you all were speaking about significant competitive intensity, discounting, etc. If you could just break that down into what are the green shoots you are seeing there? Giriraj is here. Giriraj, if you can throw the light on the strategic investments. Yeah, hi. Answering your first part of your question, which is from a sequential basis, sequentially we've seen the highest growth and the highest sales in the last six quarters. We see that momentum accelerating in the upcoming quarter, which is the Q&A quarter. That is as far as the growth trajectory of the strategic investments is concerned. In the second half, we expect the business to grow at even a higher rate than the first half, strong double digit. On what led to this growth, fundamentally, there are a couple of things that led to this growth. One part is that we have increased our investments behind both the brands, which is Brillare and TMC. With new communication, we have a new influence of Flywheel, which is kind of taking effect at this point in time. Some of the channel gains, which are notable as far as this quarter are concerned, is quick commerce, modern trade, as well as our own D2C websites have delivered strong growth. The marketplaces have also delivered strong growth. It could have delivered even better, but for the GST disruption, which Mohan G. mentioned, especially in one of the large players who could not take stocks into their warehouses because their warehouses were totally choked. All in all, I think across product categories and channels, I think we have seen, except for a couple of channels, we have seen very remarkable growth, and we expect this momentum to accelerate in the second half. Got it. Lastly, from a low unit pack perspective, where you probably would have taken grammage increases rather than price cuts, is that material part of the portfolio? If yes, how much and in which categories would this be? This is across the category. As I said, almost 90% of our portfolio, there was a change in the GST rates. In every small SKU, we have increased the grammage. The contribution would be about 20% or something. Okay, 20%. Yeah. Got it. I'll come back for more questions. Thank you. Thank you. Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead. Yeah, hi Mohan G. You have mentioned about the winter loading getting recovered in 3Q, but what about the GST impacted portfolio where there was also destocking? Is that also you feel likely to recover, or that may take some more time for the pipelines to come back there? Arnab, we have seen a good recovery in October, okay, and even the first 10 days of November. If the trend continues like this, I hopefully see it to get fully recovered in the Q3. If it flows on, then I'm sure second half we are going to fully recover. Got it. Got it. Mohan G., the expectation was. Luckily, winter has started with a good note. I'm very happy with that. Mohan G., my second question is actually related to that. If you get like you'll recover winter loading, you'll recover part of the pipeline, the winter's good, and you've also put in these initiatives on Kesh King. Should we not very confidently see double-digit growth in third quarter? I'm just trying to understand, is there any other concern why you said that we could get to high single digit, but not surely into double digit? Just wanted to understand how you're thinking of the overall growth in the third quarter and second half overall. I'm just being a little conservative, Arnab, because winter, as I said, has started with a very fine note, but it's yet to we are getting to the winter season. Okay. You are right. I'm confident of double digit. Not that I'm not. If the winter goes on like this, then nothing can stop for double digit for sure. Got it. My last question was on the GST cut. Wherever you've seen a GST cut price reduction, any category where you feel fundamentally it can help growth improve in terms of unorganized, organized, or actual elasticity of demand? I'm sure, Arnab, it should work across categories, whether it is the balms, whether it is oils. See, overall, we have seen almost only in Emami domestic business, the reduction on MRP is roughly INR 260 crore. That benefit is going to go to the consumers. It should definitely help. Now, where it helps, how much it helps is very difficult for me to say, but things should start improving soon. Got it. My last question was on margins. Of course, this quarter you were impacted because of operating deleverage. Now, going ahead, if you could just help us understand on gross margins, how's the input cost scenario, and how should we think of second half margins year on year based on input costs as well as growth that you think you could deliver? Arnab, input side, there is absolutely no pressure. It's well under control. And margins are definitely going to improve. As I said, the Q2 is an we can write off. It's not the best Q2 to you can remove that. But I'm sure there would be expansion in margin. There would be a high growth in our EBITDA margins and net margins in Q3. Other than the summer, we are going to recover everything in this quarter. Got it. Got it. Thanks. That's it from my side. All the best. Thank you. Participants who wish to ask a question may please press star and one. The next question is from the line of Kshitij Shah from Avendus Spark Institutional Equities. Please go ahead. Hi, Mohan G. Thanks for the opportunity. Mohan G., I joined a bit late, so apologies if this has been explained or answered before, but any distribution expansion or distribution reform, if any, are we undertaking as we speak? Yeah. Manish is going to answer. Hi, this is Manish here. I think we have explained in the last few quarter calls as well that from a distribution perspective, the modern trade and e-com and QC channels continue to be the focus area because that's where the behavioral shift in consumers is happening. We are already onto that bandwagon, and as the results are also sharing from time to time, we are experiencing nice steady growths in these channels. These are the channels where the young consumer shops today, and we are very conscious of that. Significant investments, both in terms of effort and people, are continuously happening there. On the traditional channels, we are a strong system. We have a strong network. We continue to maintain our presence. I mean, all our numbers in terms of presence, distributions, and all this stuff continue to hold very strongly. We continue to invest that on-ground, our presence of the products is expanding in line with the category growths. Got it. What would be our current saliency from quick commerce? It's about 40% of the e-com. Sorry, then e-com will be how much, and how much would be empty? About 11% each. I'm talking about the domestic consumer business. Got it. Second, pertaining to distribution, we have always seen in the past that we start winter on a good note, but then volatility or delayed winter has been a very regular feature of late. Are we ready to capture, let's say, if winter has to be volatile or delayed, are we ready to kind of capture it in the fourth quarter as well? Yeah, yeah. See, if you see last year, I think we had a fantastic winter. We are hoping, and this year winter is certain by our own internal estimates. The winter in north, for example, is almost about two weeks earlier. We should be capitalizing it. As Mohan G. explained earlier, we are already witnessing the trade buoyancy around it, and we are well prepared because even in Q4 these days, winter extends a bit. It is not about just Q3. It is also about playing well in Q4. Got it. Got it. Last one, Mohan G., you spoke about the changes that we have done in Kesh King. Just wanted to know what consumer insights we would have got because of late, if we see last five, seven, or ten years also, there was a phase when Ayurveda was in thick of things, then we moved to naturals. Then suddenly now, of late, it is more efficacy science-based products. When I look at brand like Kesh King, my expectation as a consumer would be around Ayurveda largely or naturals. When we kind of move to science-based, is it like kind of shifting the core of the brand, or is it like it's very much your survey or your insights say that it is very much acceptable for the brand's core as well? This was a very important move because Kesh King faced significantly challenged from the D2C brands, particularly for hair fall categories. Okay. And most of the D2C brands are science-backed. That is the need of the young consumers. That is where the trend is going. Consumers keep on trying these D2C brands as far as the hair fall category is concerned. After doing all this research for the last nine, ten months, we found that Ayurveda is, of course, there. We are not getting away with Ayurveda. If we back up with Ayurveda and science, it will make a significant difference in the long run. That was the call we took. Marketers accepted it. I think even the packaging or the ingredient story, advertising, we are going to start very soon. I'm very confident that all the 360 plan we have for Kesh King should work. Even on the efficacy that has been proven, let's say if as a consumer, I will vouch for it and I'll recommend to others as well? Every product is clinically tested. Every product. Any claims we make are clinically proven. Okay. Very clear. Thanks and all the best for coming to ours. Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go ahead. Yeah, thanks. I think you mentioned, but can you clarify what proportion of portfolio have you increased grammage or [milliliter], and what proportion you have lowered MRP? 20% is increased grammage, and balance is all reduced MRP. Okay. What is the consumer? Sachets are all grammage increase. Okay. So 20% comes from sachets, is it? Sachets, yeah. Absolutely. Absolutely. Okay. In case of sachets, let's say in response to, let's say, higher [milliliter], would you accept or is there a risk that number of units goes down a little bit? Sorry, Kunal, I missed in between. Yeah. I mean, let's say now you'll have more ml in the sachet. Would the number of units that you sell, would that go down a bit, or that should not have any impact? I don't think that should have any impact. Okay. So that's all completely transition to. Yeah. Navratna and all are single use. So I don't think that will have any significant impact. Yeah. Okay. Wherever you have lowered prices, what kind of elasticity do you expect? How do consumers respond to the lower prices in your view? There are still a mixed bag in the marketplace. Old stock is already there. Some of the old stock is there, which is, of course, now getting liquidated. Once completely the new MRP stocks go in the entire GT and the rural markets, we are very hopeful. As I said, just in our portfolio, domestic business, the MRP reduction is almost INR 250 crore, which is quite significant as far as consumers are concerned. Let us see. We will have to wait and watch where the consumer spend actually goes, wherever they save money. Just wait for one more quarter and see. Okay. In the next two, three quarters or, let's say, four quarters, if you do not see the consumers responding to lower prices in terms of higher volumes, would you look at rolling back or, let's say, at least take the prices back higher slightly? That we can't decide right now. We have just reduced our prices. Understood. Understood. Lastly, your early thoughts on FY 2027? I mean, I understand second half should be strong, but do you expect the benefits of GST rate cut to continue going forward? Any early thoughts on how FY 2027 could look like? Yeah, yeah. 100%, Kunal. As I said, why the consumers would not spend more on our categories? New consumers should definitely come in from unorganized. We have strengthened all our pillars. Of course, we are going to start next year with a lower base of summer also because we lost significantly in the summer portfolio. FY 2027 should definitely be much better than FY 2026. There's no doubt in it. Okay. Okay. That's it from me. Thank you, sir. Yeah. Thank you. Thank you. Participants who wish to ask a question may press star and one. Anyone who wishes to ask a question may press star and one now. Ladies and gentlemen, to ask a question, please press star and one. Anything, Vivek, you want to share on the international business? There are no questions. Vivek is here. Yeah, just. Hello. Good evening, everyone. International business, we have seen, I think, modest growth almost everywhere. Certain markets, candies are even higher than what we have recorded in the primary sale. Primary sale is around 8%. Certain markets have started improving for us, and we hope to have better improvements in coming quarters in most of the geographies. Many new NPDs are happening, which should also see light of the day, which will build the future portfolio in the international markets for us. Nepal did almost 100%. Despite the disturbances, we had growth of more than 100%. Thank you. The next question is from the line of Akash Shah from UTI Mutual Fund. Please go ahead. Yeah. My question was on the international business specifically. So sir, if you can broadly help us understand how the growth has been in SAARC, MENA region, and CIS, a broad range would also help. SAARC has done exceedingly well for us. SAARC markets, including Bangladesh, we had delivered over 22% growth over there. GCC and MENA markets have been flattish for us, primarily because of one major market, Egypt, where we could not do much. The rest of the markets have also shown decent growths in the marketplace. We are facing issues in one or two markets, Egypt and Bahrain, which we try to address, and things should be better soon in those markets. The entire growth in the international market has been across markets, mostly. Okay. Yeah. Sorry. Just last bit on the domestic, I mean, Smart And Handsome range. Basically, with this foray into new categories, broadly, I mean, how is the initial feedback? Any feedback or, I mean, any initial signs that you have received from the market? This is mostly on a test marketing stage right now. We have just launched it in one platform to see what is the response like. It is just about last month we launched it in a platform. Let us see. We will have to wait. We are going to roll it out, of course, in other e-comm sites and NMT. It is yet to be done, but we are very optimistic. Okay. Okay. Sure. Thanks. Thank you. Participants, to ask a question, please press star and one. Ma'am, Gul Raj is also here. He's the CEO of the Health Care Division. Gul Raj, can you throw some light on the healthcare? Yes, Mr. Mohan G. Thank you. I think as Mr. Mohan G. mentioned at the start of the call that from an activity perspective, we had good growth in the medical business. Gul Raj, can't hear you very clearly. Yeah. Is it better now, sir? Yeah. Go ahead. Go ahead. Yeah. In the last quarter, we had good growth coming in from the medico business, which is the Ayurvedic business catering to the Ayurvedic doctors and other doctor segments. We grew by around 8% there. We also did well in some focus brands like cough syrups, honey, and even our D2C site, Zandu Care, had reasonably good growth considering the challenges faced across businesses on the GST reductions, etc. We are fairly bullish about how the current quarter will go. We have taken initiatives to scale up our business in some of the focus categories, which would be in the Chyawanprash range. It will be continued focus on some of the growth driver categories such as cough syrups, such as supplements, such as some of our D2C new launches. Even in the OTC business, we would do a better performance in quarter three. At the same time, across most of the categories, we are looking at growing our market shares compared to the other Ayurvedic players across categories. We are taking many initiatives to even expand our coverage among doctors and among retailers. Thank you. Thank you. Participants to ask a question may press star and one. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you, everyone, for joining us in our quarter two earnings call. Thank you, IIFL. Thank you, Percy, for organizing this. Thank you. Have a good day. Thank you so much. Thank you. Thank you. On behalf of IIFL Capital Services Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect the lines.