Emami Q1 FY27: Domestic growth stays strong as margins absorb inflation and the portfolio mix shifts

Emami Limited opened FY27 with a resilient revenue performance, even as the operating environment turned less friendly on costs. For the quarter ended 30th June 2026 (Q1 FY27), consolidated revenue from operations rose 14.9% year-on-year to 1,039.2 crore. EBITDA increased 5.6% to 226.2 crore, but profitability below EBITDA was impacted by a sharper tax outgo and a notable decline in gross margin.

The company framed the quarter as one of execution strength amid external headwinds. Domestic demand remained healthy, while international business was disrupted by the West Asia conflict. At the same time, Emami continued to expand its future-growth portfolio through consolidation of Axiom Ayurveda (AloFrut) for the full quarter and IncNut Digital from 1st June 2026, reflecting the integration of new-age brands such as VediX and SkinKraft.

A quarter led by domestic momentum, with new engines scaling

Emami reported domestic business growth of 20% on a reported basis. On a like-to-like basis, domestic value growth was 12% and volume growth was 8%, after adjusting for the prior-year base of Axiom Ayurveda and IncNut Digital. The company also highlighted a continuing shift in where growth is being captured. Organised channels grew 19% on a like-to-like basis and now contribute 32% of domestic business. Modern trade and e-commerce sustained momentum, and quick commerce now contributes 35% of e-commerce sales.

In Q1 FY27, Emami also changed how it reports the domestic portfolio, moving from brand-wise disclosure to category-led reporting. Management positioned this as a reflection of the company’s portfolio diversification and a step toward aligning with broader industry reporting practices.

International business, however, remained a drag. Net sales from international operations declined 12% year-on-year, primarily due to disruptions arising from the West Asia conflict that constrained order execution. Management commentary suggested that international performance is expected to improve as logistics and operating conditions stabilise.

Consolidated financial snapshot

Category performance: Hair care leads; strategic investments expand their footprint

Under the new disclosure structure, the domestic business is grouped into Skin Care, Hair and Scalp Care, Health Care, and Strategic Investments. In Q1 FY27, Hair and Scalp Care emerged as the best-performing large category, while Skin Care and Health Care grew modestly. The Strategic Investments portfolio stood out on growth and is becoming more material to the domestic mix.

Hair and Scalp Care performance was supported by Navratna Cool Oils delivering double-digit growth and 7 Oils in One continuing its strong momentum. Kesh King grew in mid-single digits during the quarter, with management indicating that it expects double-digit growth by the end of the year.

Within Skin Care, talc and prickly heat powders saw mid-single digit growth despite an uneven summer across regions. The company also noted traction in certain personal care adjacencies such as sunscreen and masks within Smart and Handsome in e-commerce and modern trade.

Health Care grew 2% year-on-year, with Emami highlighting strong growth in parts of the Zandu OTC portfolio, while the pain management range was impacted by delayed monsoons, particularly in western regions.

The Strategic Investments portfolio reflects Emami’s push to build multiple growth engines beyond the core. This portfolio includes The Man Company, Brillare, Axiom Ayurveda and IncNut Digital. On a like-to-like basis, management reported 61% growth, and noted that this portfolio now contributes about 18% of the domestic business. In the earnings call, management indicated the aggregate EBITDA profile of the strategic investments vertical is close to EBITDA neutral at present, with a longer-term profitability target over a multi-year horizon.

Margins: input inflation and mix changes show up sharply in gross margin

While revenue growth was strong, Q1 FY27 was marked by one of the sharper inflationary environments seen by the sector in recent years, according to management. Materials cost rose to 34.2% of revenue from 30.6% in Q1 FY26, and gross margin fell 360 basis points to 65.8%.

Management attributed the pressure to higher crude prices and inflation across packaging materials, along with a changing business mix following integration of acquired businesses. Emami stated it undertook measured price increases during the quarter and is implementing further pricing actions. It expects to more than offset the absolute increase in input costs during the financial year, supported by productivity enhancements, procurement efficiencies and value-led revenue management initiatives.

Despite gross margin contraction, EBITDA grew 6% to 226 crore, supported by disciplined cost management. PBT rose 4% to 195 crore. PAT, however, declined 15% year-on-year to 139 crore. The company explained the PAT decline as being driven by normalization of the effective tax rate. During the call, management indicated that the tax rate should be around 25% to 26% for the year.

What to watch: international recovery and execution of transformation initiatives

The quarter’s largest uncertainty remains international business, where order execution was constrained due to conflict-related disruptions. Management indicated that international performance should improve meaningfully in Q3 and Q4 as strategies have been realigned and disruptions reduce.

Alongside business performance, Emami described three transformation initiatives that are expected to be completed during FY27: enhancements in supply chain planning, inventory management and distribution visibility; deployment of Sales code AI for better salesforce productivity and real-time decision support; and the creation of an enterprise-wide analytical hub for data analytics and AI.

The strategic investments vertical is another key monitorable, not on growth but on profitability. Management commentary suggested the portfolio is scaling quickly, with gross margins described as north of 60% for The Man Company and north of 70% for Brillare and IncNut, while aggregate EBITDA is currently around breakeven. The pace at which this vertical moves from breakeven to sustained profitability will matter, especially as its contribution to domestic sales expands.

Closing view

Emami’s Q1 FY27 performance reinforces a clear theme: topline resilience is being supported by domestic execution, channel transformation and the rising scale of strategic investments, even as margins absorb commodity inflation and portfolio mix shifts. The company is relying on further pricing actions and cost discipline to rebuild gross margin, while expecting an international recovery in the second half of FY27.

With domestic categories still growing, the strategic investments portfolio contributing a meaningful share of domestic revenue, and FY27 transformation initiatives underway, the next few quarters will likely be judged on two practical outcomes: the speed of margin recovery and the ability to translate new-age growth into durable profitability.