Buy EMMBI Industries; target of Rs 139: KR Choksey

KR Choksey's research report on EMMBI Industries

In Q1FY23, Emmbi’s revenue grew 1.6% YoY to INR 1,058 mn. Though on QoQ basis revenues declined by 3.0%. EBITDA has seen a decline of 4.7% YoY/17.3% QoQ to INR 106 mn. The fall in EBITDA was due to higher other expenses, which increased 44.1% YoY to INR 251 mn for the quarter. EBITDA margin also contracted by 66 bps YoY and 173 bps QoQ to 10%. PAT has seen a de-growth of 32.3% YoY/34.0% QoQ to INR 30 mn. PAT margin contracted by 143 bps YoY/134 bps QoQ to 2.9%. Emmbi is embarking on the path to become a zero-waste company by FY23. The company is right on track for the same and is confident to reach the ambitious target.

Outlook

At CMP of INR 91, shares of the company are trading at a P/E of 4.6x/4.1x its FY23E/FY24E EPS. We continue to value the stock at 6.25x on its FY24E EPS of INR 22.2/share, which yields a target price of INR 139 (unchanged) giving an upside potential of 52.4%. Accordingly, we maintain our ‘BUY’ rating on the stock.

For all recommendations report, click here