Buy Emmbi Industries; target of Rs 205: ICICI Direct

ICICI Direct's research report on Emmbi Industries

Emmbi started its journey in 1997 with the manufacture of plain vanilla FIBCs with application in handling of bulk commodities. Thereafter, along its journey till date, Emmbi has been making innovations in its product profile to suit changing market needs. In the FIBC range, it now manufactures FIBC, which are anti-corrosive, anti-carcinogenic, etc.

Outlook

With limited capex in FY17-19E and sustainable CFO of Rs 22 crore, we expect, debt to decline with consequent debt/equity expected to decline to 0.5x by FY19E. Return ratios are also healthy with FY19 RoE and RoCE expected at 18%. We value Emmbi at Rs 205, i.e. 18x P/E (0.7x PEG) on FY19E EPS of Rs 11.4. We maintain our BUY recommendation on the stock.