Multibagger Stock Tip – Emami Limited


Company Overview:

Emami Limited is a leading Fast-Moving Consumer Goods player in India. It has been in the health, beauty and personal care since the last 35 years and has sustained its prominent position in Ayurvedic products. It was founded in 1974. The founders was Mr. R.S Agarwal & R..S Goenka. Headquarters Situated Kolkata, West Bengal.

 In 2008 the company announced that it intended to offer baby care products & also health products unit offers tonics for colds and coughs as well as Nutraceuticals.

Company Revenue Back-Ground:

The company posted elegant numbers for the quarter ending December 2012. The Revenues for the quarter ended December 2012 of Rs 548.66 crores rose by 21.30% from Rs.452.36 crores y-oy driven by strong volume growth across all the key product categories. Operating profit surged 13.30% at Rs.162.43 crores as against Rs.143.36 crores in the like period last year due to steep increase in menthol prices. The company has reported 21.65% rise in its net profit at Rs 114.96 crore for the quarter as compared to Rs 94.50 crore for the same quarter in the previous year. EPS for the quarter stood at Rs.7.65.

Boroplus showed volume growth in the range of 28%-30% aided by good winter season; Balms grew between 18%-20%, in Fair and Handsome it is about 10%-12% and in Navratna Oil it is about 5% in the quarter ended December 2012.

The entire influence brands reported strong and consistent performance during the quarter despite various challenges in the macroeconomic environment and input cost pressures. In value terms Boroplus grow by over 30%; Navratna grow by 13%; balms grew by 17%; Fair and Handsome grow by 19%. Healthcare division comprising of the OTC, ethical and generic products also performed credibly in this quarter, registering a very strong growth of 25%. Zandu Pancharishta sales tripled in this quarter.

Company Valuation:

Among increasing penetration, sustained sales momentum, powerful brands, judicious price increases and new launches; Emami’s growth prospects looks capable. The Company is trading at an attractive valuation at 28.84x and 24.95x of FY13EPS of Rs 20.77 and FY14EPS of Rs 24.01. We bet to Grab Share around 380 for Target 500. In Time Period of 9-12 Months