Ladies and gentlemen, good day and welcome to Emami Limited Q2 FY27 earnings conference call hosted by IIFL Capital Services Limited. 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 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddhesh Deshmukh from IIFL Capital Services Limited. Thank you, and over to you, sir. Yeah, good afternoon everyone. I have the pleasure to host the management of Emami Limited for their 2Q FY27 earnings call. From the management, we have with us Mr. Mohan Goenka, Full-time Director and Vice Chairman. Mr. Vivek Dhir, CEO International Business. Uh, Mr. Dhruv Aggarwal, Chief Growth Officer. Mr. Gul Raj Bhatia, President Healthcare. Mr. Manish Gupta, President Sales. And Mr. Rajesh Sharma, President Finance and IR. I'll hand over the call to Mr. Mohan Goenka for his opening remarks, post which we'll open the floor for Q&A. Over to you, sir. Yeah. Good afternoon, ladies and gentlemen. Thank you for joining us today for Emami Limited's Q2 FY27 earnings call. Building on the strong momentum from Q1, we have had another quarter of broad-based strong double-digit growth. With both our core brands and our strategic investments performing well. Let me walk you through the highlights for the quarter. Our consolidated revenue grew by 36% to ₹1,088 crores. Domestic sales grew by 49%, driven by volume growth. of 43%. On a like-to-like basis, considering previous period's revenue of Axiom and Incnet Digital, consolidated sales grew by 24% and domestic business grew 32% with a volume growth of 26%. Category-wise, skincare grew by 31%. This was, this was led by robust growth in our tel portfolio, which grew by over 2x in the quarter. Vora Plus grew in near 20s and Smart Handsome delivered double-digit growth. Hair and scalp care grew by 30% during the quarter. Navratna Oil grew in the 30s and KashKing grew in high teens. We also launched KashKing Scalp First range in Modern Trade and e-com. And I must call out Seven Oils in One, which continued its remarkable run and nearly doubled its sales this quarter. It is now one of the fastest growing brands in our core portfolio. Healthcare range grew by 11% with pain management range growing in the teens. OTC portfolio also performed well and grew in high teens. Medico range posted a steady single-digit growth. Now coming to strategic investments portfolio, on a like-to-like basis, we grew by an impressive 73%. and contributed approximately 26% of our domestic business. Axiom and Brillair more than doubled their sales. Incnut grew by over 50% and The Man Company by over 30%. We expanded Axiom in modern trade chains and QuickCom. And we invested in building visibility for the aloe fruit brand. For Incnut, we are now expanding beyond D2C into marketplaces. We have commenced operations on QuickCom, and we have also entered into new international markets. When I step back and look at all of this together, both our core portfolio and our strategic investments are growing strongly, and they are doing so side by side. We are deliberately building a more diversified business. One that spans traditional FMCG, personal and healthcare, and 2, the premium beauty and grooming, digital-first brands, and emerging consumer platforms. This diversification does 2 things. It widens our growth runway and it makes the business more resilient across different economic and consumption cycles. Our channel transformation is moving steady at a steady pace. Organized channels now contribute to 37% of our domestic business. Modern trade and e-com both maintained strong momentum, and QuickCom now accounts for around 15% of our digital sales. This is a significant shift in how our consumers are choosing to shop with us. On our international business, Q2 performance was impacted by a few specific external disruptions, with revenue declining by 2%. Importantly, the weakness was not broad-based. Nepal was impacted by severe floods. And Gulf markets continue to face supply chain challenges arising from ongoing regional conflicts. Excluding Nepal and Iraq, our international business grew by 6%. Inflationary pressures remained elevated through the quarter, and the sharp rise in input costs widened our margins— weighted on our margins. Together with the changing business mix following the integration of the acquired business, this resulted in higher COGS and a moderation in gross margin. by 520 basis points compared to last year. Despite these pressures, EBITDA grew by 25% to ₹222 crores and profit before tax grew by 29% to ₹194 crores. I think this reflects the resilience of our business model and the effectiveness of the cost management initiatives our teams undertook during the quarter. Profit after tax, profit after tax stood at ₹144 crores, lower by 3%, and that is largely due to the normalization of our effect effective tax rate following the phased out of fiscal benefits. Looking at the first half of FY27, revenue stood at ₹2,127 crores, up 25%. EBITDA was at ₹449 crores, up 15%. And profit before tax, ₹388 crores, growing by 15%. On capital allocation, we completed our share buyback worth ₹281 crores last month. To buy back 73 lakh shares, the board has also approved the first interim dividend of ₹5 per share, which would amount to a payout of ₹200 and 14 crores. Sorry. As we look ahead, we remain very optimistic about the growth prospects of the business. We are encouraged by the strong performance of our core brands, the rapid scaling of our digital-first brands, and sustained traction in Modern Trade, eCom, and QuickCom. Commodity inflation and geopolitical developments remain areas to watch for. However, our diversified portfolio, strengthened distribution, robust innovation pipeline, and disciplined cost management position us well to deliver sustained profitable growth through the remainder of FY27. With that, I would now like to open the floor for questions. Thank you. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1. On the touchtone telephone, if you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abineesh Roy from Nuvama. Please go ahead. Yeah, congrats on great numbers. My first question is on the new launches, a lot of new launches. I want to focus on only 2 for now. Uh, on the MA range and on the Cash King Scalp First range, uh, both of these, uh, you seem to be a slightly late entrant. So if you could tell us versus the existing, uh, strong players in both segments. How is your pricing? And you have tried premium personal care earlier also, so from that, uh, What, what are the learnings? What are you doing different this time? And how was the success of the premium personal care which you had tried earlier, uh, if you can discuss that also. That is my first question. Yeah, so Avnish, as far as the baby care range is concerned, of course we are trying it you know, on firstly on e-com and modern trade. What is differential is our prices are firstly not as expensive as the other products in the market. It is almost 25 to 50% cheaper depending on the product range. Okay, so we are looking really at a mass market, uh, compared to some of the others. The market size is almost, uh, 30,000 to 40,000 crores. Okay, and, uh, Boroplus being purely Ayurveda we have launched under the brand Boroplus. So, uh, we will try it out. Of course, uh, we are highlighting some ingredients like, uh, special almonds, Kashmiri cashew, whatever is the ingredients. So let us see. Uh, I think we are well, uh, we are well positioned as far as price and, uh, e-com, quick-com is concerned. Then of course it would depend on the market, but we, we, we are going to, uh, you know, this time, uh, focus a little more As far as the baby care range is concerned. And the Cash King Scalp First is again another— we wanted to expand Cash King brand. This time it is a premium product pricing almost in the range of ₹500 to ₹1,000. Let us see, you know, again, uh, we have now strong, uh, presence in e-com and quick-com with our other products. So our relationships there, we understand how that market works. And, uh, you know, so this is a new entry as far as Cash King is concerned. We want to take Cash King brand, you know, slightly towards the premium side of it. Yeah. One follow-up question on the Cash King First Scalp. Of course, at that price point, uh, hard science will work. So are you focusing more on taking this as a brand extension or there is a real consumer need which is getting filled which will require hardcore R&D. So if I wanted to ask on, is there something on the product side which is really differentiating apart from, say, the very good packaging, very good brand extension, etc.? Anything disruptive on the product formulation? Absolutely. And in fact, we are heavily relying on the, you know, R&D side of it, because if you see into the details of it, it has, uh, you know, some ingredients which are unique, you know, we are calling it detoxifying scalp, then scalp salve or something, you know. So, you know, these are like, uh, we are relying heavily on the R&D. The consumers have become very intelligent. They, they now read the levels, uh, labels. And, you know, we are also going to highlight on these platforms. The ingredient side of it. That's why they're, they're coming at a big premium. Understood. Last question on your strategic investment, uh, congrats, very good numbers there. But they are, but they are of course, uh, you know, uh, much cheaper than, uh, the L'Oréal or the other Dermaco, Pilgrims, they are still at a lower end of it. Yeah. Understood. Last question on strategic investment, Mohanji. So here there is a 5% acceleration quarter on quarter. So if you can discuss on the profitability side, clearly these are currently in the gestation. phase, I wanted to understand, is there any improvement on the profit matrix versus Q1? And on the 4 brands, you did give out the revenue growth numbers specifically. But where is the confidence level higher, uh, from a medium-long term on those 4 sub-segments within the strategic? Where is the highest confidence you are getting this year? Of course being first year of relaunch or some of them are new, growth rates are very, very robust. I don't think that may give us the full picture. I wanted to understand from your own Uh, initial targets versus what you are getting, where is the confidence level higher? Yeah, so Dhruv is there. I would pass it on to Dhruv to answer. But these are not new brands, Avnish. These have been in the market for quite some time. Yeah, a lot of relaunch has happened— Man Company and all that. Yeah, yeah. So Dhruv will answer. I think, uh, you know, I think we are up 5% versus, uh, the H1 number, but overall versus Q1, we are actually up 12%. So that is— I remember correctly, Q1 was at 61%. growth. Now, uh, the reason I think if you ask me which are the ones that, uh, I have a lot of confidence on, I have a plan for— or we have a plan for all, all 4 of them, right? So whether it is Brillair, TMC, Axiom, or Inklut. I think all 4 of them, they are different levers, very, very different levers that we are growing across. Uh, TMC was one, I think that was a little stagnant. We've got it moving to high 20%. Uh, margins. And now this quarter it's up 30% plus. So we're very confident that those plans are working. It has to do with reformulations, making sure that we have, uh, we have the best product offering to customers. And then marketing that in the way that consumers are looking at. Ditto for some of the other brands. I think there's just a very different set of initiatives across all, and I don't see any reason why we couldn't could— we can't continue this growth. Uh, to achieve this kind of growth, I think everything has to fire. Even if one of the brands, uh, goes down, you won't see these sort of numbers. So, uh, longish, will we continue to see a 70%? Probably not, but definitely strong growth levels across all 4. So thanks, I'll come back. Uh, thank you. At least there's a lot happening, you know. Of course, as, as Dhruv said, 70%, uh, is aggressive numbers, but, you know, we are also hiring a lot of new talent. A lot of R&D is going into— many of the products are going to come into, you know, some of the products are going to come into GT. So there are huge plans going forward for all the 4 product ranges. Sure, thank you. Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Yeah, good afternoon. Uh, just, uh, you know, one question was on the profitability side of things. So obviously to support the growth, uh, and in terms of the new brands typically are at higher A&P spends. You've seen, uh, you know, the NP ratios being a tad higher, not too much higher actually. I just wanted to understand that, you know, do we see this, uh, broad ratio, which is around 20% last year. Should we assume that this structurally is a bit higher for the next 2 years as we look to not only add, uh, you know, get the B2C brands up, up and running even at a good pace, but also, uh, on at an organic level, you seem to be, you know, significantly adding to the portfolio. So just wanted to get a color on kind of A&P to sales, uh, you know, thought, uh, you know, where should this land over the next 2 years as you are in a significant investment phase? So Harit, we are definitely, you know, on spending mode because our focus has been growing the top line. After many, many quarters, we are seeing, uh, you know, our domestic business, particularly our core portfolio, firing in many, many brands. So at this point of time, we are not really, you know, uh, thinking of, uh, half a percent, 1% here and there. Wherever we are finding opportunities, we are wanting to spend on advertising. But having said that, I think you should take in the range of 18 to 19% max on A&P spends. For the whole year, for the full year. Got it. And the second bit was, um, on, uh, uh, uh, sorry, the second bit was on the core portfolio. Uh, I mean, everything is core now as far as India is concerned, but I just wanted to understand 2 things. One is, what is the extent of price increases that you've had to take to offset this level of inflation, and does some of it come in, in the quarters going forward? And the second piece was on rural. If you could just give us a sense of, you know, I know your, your, your channel mix is changing and rural salience probably going down, but I just wanted your sense on, you know, how rural outlook is, how it— how you are seeing things on the ground even in Q2 and in October, um, you know, this is in the context of inflation, rainfall deficit, etc., etc. Are you seeing pockets where there is a little bit, uh, you know, volatility? So those are my 2 questions. Thanks. So, Harit, as far as price increase is concerned, it has been in the range of 5.5%, you know, for the full year. Whatever cost increases have happened, absolutely we have passed on to the consumers. Okay, but, uh, and as far as rural is concerned, uh, you know, some markets, particularly in south and west, where we have seen significantly less rainfall and drought-like situations, there the rural markets have not performed so well, particularly for some of our brands, you know. But by and large, you know, some pockets of UP have also not done so well. You know, but many districts have performed very, very well where we have seen good rainfalls. So it has been a mixed bag, but, you know, now we are entering into the peak season as far as winter is concerned. Post Diwali, I think things should pick up now. Great job. Those are my questions. Thank you and all the best. Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs. Please go ahead. Yeah, hi Mohanji, congratulations on a very strong quarter. My first question was on the core business. If I look at the first half, I know this quarter had a highly low base because of the GST-related issues last year. If you look at the first half growth of the core business, how do you think of the second half growth? Because there has been a lot of shifts of timing of festivities. There is also the GST upstock, destock. So generally, as we look for second half versus first half, what's your sense of how the core business could be doing? So now we are seeing the momentum continuing, you know, and we expect our— this business to grow anywhere between 18 to 20% for the second half. Uh, got it. So this is the total, uh, uh, the, the, uh, the, the total everything put together. Yeah. Understood. And Mohanji, about the international business, the decline has become lesser this quarter, but again, there, given the supply chain changes and all, if you could give us an update on how you're How is the situation right now and therefore what do you expect? Yeah, so Vivek, our international CEO, is there. Vivek, could you throw some light? So it has been only in, say, a couple of geographies where we couldn't manage, uh, the growth over there, but most of the other places we have grown. So when you look at coming months, last 2-3 months, growths are being observed in many, many places. We have like turned around business in Bangladesh, GCC, because of the OPC hazardous goods, which is contributing around, say, 2% of our business. That is still on a hold. We are not able to move the goods from India to other places, so that is still remaining, uh, unresolved issue for us. But otherwise, uh, we are moving ahead on growth in almost every geography now. So I think worst is behind us in international. And, uh, Arnab, October— Vivek, if you can correct me, I think October month was positive for the international business. Yes, sir, it was high double digit. Yes. Yeah, so I think we are on the growth path, Arnab. Got it. And my last question is about margins. So if I look at the gross margin impact this quarter, which is around 500 basis point increase in raw material cost, so how much of this, Mohanji, is kind of fundamental because your mix has changed towards, uh, the newer categories, and how much of this is driven by input cost inflation where, let's say, between pricing and if crude comes off you think you will be able to recover back? So, Arnab, almost out of 550 basis points, 400 basis points was purely RM cost and balance was the mix. But I am, I am very confident, uh, Arnab, that, you know, once we see, uh, these— the, the second half is going to be higher because we have procured it at these prices now. But now I think going forward we should benefit out of these input corrections. which will be for next year. Understood. Uh, thanks. That's it from my side. All the best. Yeah, thank you. Thank you. The next question is from the line of Rahul from Bowhead. Please go ahead. Yeah. Uh, so I had a question. Like, at the end of quarter 1, you had given a guidance for strategic investments to hit around ₹750 to ₹800 crores. And, uh, we have hit around ₹240 crores kind of run rate in this quarter. So do you think there is a scope to upgrade guidance on that? Yes, so Dhruv, would you want to throw some light? We'll do 800+ this year, uh, for sure. Yeah. Should keep it at 850 crores, right? And on international, but run rate, if you will take as the run rate, you know, then it would be almost, uh, 1,000 to 1,100. Yeah. Right. On, sir, international, sir, actually Dabur reported yesterday and they reported double digit in Middle East and 33% in Bangladesh. So is our supply chain very different from what Dabur does? In those countries? So Dabur has almost like 11 manufacturing locations outside of India, different locations. Their geography of play is, I think, quite different. Our overlap happens only in probably GCC and Bangladesh. For that matter. So inflation has been felt almost everywhere, and price increases, consequent scheme reductions we have been able to do. But most of our geographies, when you look at my presences there in Russia, Ukraine. That's again a disturbed geography, but it's growing for us. Similarly, GCC and adjacent markets to the Hormuz, like Iraq. Which suffered quite a bit in quarter 2 for me, almost zero sale. We were not able to move goods to Iraq at all. Now we found alternate routes and moving through Port Gabba. And those type of limitations are not there with those companies. They're, they're doing business in US, they're doing in Africa, South Africa, Nigeria. And with manufacturing locations over there. So we have limited manufacturing in India, Bangladesh, UAE, and then Germany. Around. And plus we are having a tall manufacturing in Thailand as well, but the goods need to move into the markets where we have the business. So even, even the Black Sea route till Russia and other things were disturbed during the quarter, which other companies do not face those type of issues. So issue listing of, uh, Dabur or probably Godrej or Marico will be different than what we are facing, right? Right. Thank you. Thank you. That's all from me. Thank you. Thank you. A reminder to all the participants to press star and 1 if you wish to ask a question. The next question is from the line of Saksham Tyagi from Deswaladu Advisory. Please go ahead. Hello, am I audible? Yeah, you are. Okay, so first of all, thanks for the opportunity, sir. So my first question is that, sir, in the previous phone call you mentioned that you are creating a data analytics and AI platform, so I just wanted an update. Like, I just wanted to know what's the progress so far and what will be the impact once the work is completed. Yeah, so Manish is leading this AI. Yeah, Sachin, could you repeat your query please? I couldn't really hear it properly. Sure, sir. In the previous phone call, you mentioned that you are creating a data analytics and AI platform, so I just wanted to know like what's the progress so far and what will be the impact once the work is done? Related to the AI setup and all. All right, okay. So we are progressing on track. In fact, we are a little ahead, and that gladdens us. What we are doing is essentially digitizing and using AI for our end-to-end processes, right from forecasting till the fulfillment. So our entire process, whether it's supply chain, in-between invoicing, and the distributor-led frontline booking, all this process is being revamped through new technology, new tools, as well as putting AI to work. I mean, I think the progress you are making is superb, and more results will come in the following quarters as we complete the transitions. So is there any given timeline for that or something? So we are expecting that we should be able to complete this, uh, in the next quarter. So April onwards we should start seeing real gains. We are already seeing them in pilot phases in some markets we have done. We are getting some very impressive results. Okay, sir, understood, sir. And my second question is on the growth side. So I think the international business growth declined nearly 7% on year-on-year basis. So How are you planning to turn the growth rate positive, and by when can we actually expect some positive change in that? International business is already in green now. So when we look at, say, October and September as well as August, we are moving into the green. Initial months when things were being realigned, we had lost some business. The one part of my business which is not there with any other company is the OTC goods, which is pain management. which moves— a part of that is categorized as hazardous due to the spray and gaseous form goods. So those movement is still curtailed and we are not able to move goods out of India. At the moment. So that contributes roughly around 2% of my global business, uh, the part which I'm not able to move out. So that also continues to put pressure, but we are into the green territory. For last three months now. Okay, so we are in the profit on quarter on quarter basis, right? Yes, yeah, yeah. Yeah. Okay, sir. Thank you, sir. Thank you. On behalf of IIFL Capital Services Limited and Emami Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you, thank you everyone for joining us today for our Q2 quarterly results. Thank you. Thank you, thank you, thank you.