Emami Limited Navigates Q2 FY26 with Strategic Reforms and Product Innovation

Emami Limited, a prominent player in India's FMCG sector, recently announced its unaudited financial results for the second quarter and half-year ended September 30, 2025. The quarter proved to be a period of significant transition and strategic recalibration, marked by a landmark GST reform and dynamic market conditions. While the company experienced a temporary dip in consolidated revenues, management remains optimistic about a robust recovery and sustained growth in the upcoming quarters, driven by strategic initiatives and a favorable market outlook.

For Q2 FY26, Emami reported consolidated revenues of ₹799 crore, reflecting a 10% decline year-on-year. This was primarily attributed to a 15% decline in the domestic business, largely influenced by temporary trade disruptions following the GST rate reduction and a challenging summer season that impacted seasonal portfolios like talc and prickly heat powders. The company's EBITDA stood at ₹179 crore, a 29% decline, while Profit After Tax (PAT) was ₹148 crore, down 30%, both reflecting the temporary impact of the lower topline. Despite these challenges, gross margins remained stable at 71.0%, underscoring the company's cost discipline and input price stability. The Board of Directors also declared an interim dividend of 400%, amounting to ₹4 per share for FY26.

GST Reform: A Structural Positive

The quarter witnessed a transformational policy development with the government's decision to reduce GST rates across key FMCG categories. This reform is structurally positive for Emami, as nearly 88% of its core domestic portfolio benefited from the reduction in GST from 12% or 18% to 5%. This change brings 93% of the company's core domestic business under the 5% GST rate. In line with its consumer-first philosophy, Emami swiftly passed on these benefits, reinforcing its commitment to value-driven affordability and accessibility. While the implementation caused temporary trade disruptions in September, leading to deferred purchases and liquidation of higher-cost inventory, the long-term impact is expected to be demand acceleration, improving consumer purchasing power, and stimulating broad-based consumption.

Strategic Initiatives and Product Innovation

Emami continued its strategy of purposeful innovation and premiumization. The company deepened its Smart & Handsome portfolio, rebranded from Fair & Handsome, with 12 new SKUs across sunscreens, shower gels, under-eye creams, deodorants, face serums, and sheet masks, broadening its relevance across the male grooming spectrum. The initial rollout across modern trade and e-commerce platforms has been encouraging. Additionally, Kesh King was strategically relaunched as Kesh King Gold, featuring refreshed packaging, sharper positioning, and an upgraded formulation enriched with Gro Biotin and Plant Omega 3-6-9, scientifically proven actives that amplify the efficacy of 21 Ayurvedic herbs. This relaunch aims to build on its legacy while enhancing credibility and relevance among modern consumers, particularly addressing competition from D2C brands.

The company also strengthened its Zanducare portfolio with new offerings like Good Gut Cleanse & Detox Shots and Acidity & Bloating Relief Tablets, complementing earlier digital-first innovations. The international business delivered a steady 8% growth despite macro and geopolitical headwinds, driven by market-specific innovation and localized execution. New product developments in the international segment included the Creme 21 Xtra Bright range and various body lotions, enhancing its presence in skincare and personal care categories globally.

Outlook for H2 FY26 and Beyond

Management expressed strong confidence for a robust and profitable second half of FY26. Mohan Goenka, Whole-Time Director and Vice Chairman, highlighted a healthy rebound in trade sentiments in October, with deferred winter loading being recovered. He anticipates high single-digit to double-digit growth in Q3, supported by a favorable winter season and normalization of trade post-GST reform. The non-GST impacted portfolio delivered encouraging growth of 10% in Q2, signifying intact consumer demand. For FY27, management expects a significantly better performance, driven by a lower base in the summer portfolio and new consumer acquisitions from the unorganized sector due to GST benefits.

Emami's strategic interventions, continued expansion of organized channels, operational agility, and cost leadership are expected to deliver sustained profitable growth and strengthen its foundation for long-term value creation and market leadership. The company's proactive approach to policy changes and consumer trends positions it well to capitalize on emerging opportunities and mitigate market challenges, ensuring a resilient growth trajectory.