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May 26, 2012, 11.20 AM IST | Source: Moneycontrol.com

Buy Emami; target of Rs 526: Firstcall Research

Firstcall Research is bullish on Emami and has recommended buy rating on the stock with a target of Rs 526 in its May 18, 2012 research report.

Firstcall Research is bullish on Emami and has recommended buy rating on the stock with a target of Rs 526 in its May 18, 2012 research report.

“Emami Ltd was established in the year 1978, as Himani Ltd (incorporated as a Private Limited Company in 1949) had become sick unit and was up for sale. Himani, almost a 100 year old company with good brand equity in Eastern India and a well laid out factory in Kolkata, was producing a number of cosmetics. Ten years after commencement of the company, it launched their first flagship brand Boroplus Antiseptic Cream under the Himani umbrella in 1984. Many additional brands followed Boroplus including Boroplus Prickly Heat Powder which came as a brand extension of the mother brand. Emami brands started selling in all states of North, East and West India. Today Boroplus is not only the largest selling Antiseptic Cream in India but also in Russia, Ukraine, and Nepal.”

“In 1998, Emami Ltd was merged with Himani Ltd and its name was changed to Emami Ltd as per fresh certificate of incorporation dated September1, 1998. Within the three decades, the company has grown into a huge Rs. 1000 crore Emami Ltd under the flagship company of the Rs.3000 crore Emami Group. This preoccupation with wellness is especially witnessed within the personal care space, where health and beauty are now coming together. People are no longer satisfied with products that just make them look good or feel good, but also want them to ‘do-good’. Moreover, the do-good aspect is understood in terms of a health rather than a cosmetic benefit. Emami’s quality products not only have a pan India presence, but also have a deep imprint in over 60 countries across the world including GCC, UK, Sri Lanka, Bangladesh, Nepal, African and the CIS countries. Emami Limited has two subsidiary companies Emami UK Limited in London and Emami International FZE in UAE. The company has ultra modern manufacturing facilities at Kolkata (West Bengal), Abhoypur and Amingaon (Assam), Panthnagar, Baddi (Himachal Pradesh), Dongri, Silvassa, Vapi. It has adopted the Total Quality Management system and all its manufacturing facilities have received cGMP and ISO 9001:2000 certifications. The Amingaon unit received “Par Excellence Award” and Abhoypur unit received “Excellence Award” in the All India Competition on “National Convention on Quality Circles” conducted by National Quality Council.”

“Emami Ltd has reported net profit of Rs 723.70 million for the quarter ended on March.31, 2012 as against 3543.70 million in the same quarter last year, an increase of 13.88%. It has reported net sales of Rs 4035.50 million for the quarter ended on March.3, 2011 as against Rs 3543.70 million in the same quarter last year, a rise of 32.62%. Total income grew by 17.14% to Rs 4238.20 million from Rs.3618.00 million in the same quarter last year. During the quarter, it reported earnings of Rs 4.78 a share.”

“At the current market price of Rs.461.30, the stock is trading at 24.12 x FY13E and 21.31 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.19.12 and Rs.21.64 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 13% and 13% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 14.53 x for FY13E and 13.16 x for FY14E. Price to Book Value of the stock is expected to be at 7.01 x and 5.27 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 526 for medium to long term investment,” says Firstcall Research report. 

Institutional holding more than 40% in Indian cos

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