Buy Emmbi Industries; target of Rs 208: KR Choksey

KR Choksey's research report on Emmbi Industries

PAT came in at INR 40.9 Mn against our estimate of INR 30.8Mn which was up by 10.19% Y-o-Y and 70.87% Q-o-Q. PAT Margin stood at 6.1% against our estimate of 4.8% resulting out of better operational performance. PAT for the year stood at INR 127.6Mn which grew 20% Y-o-Y led by improvement in PAT margins to 5.6%. EPS for the year stood at INR 7.2.

Outlook

We believe this should result in strong financials with healthy return ratio (ROE 16% in FY17 to 21.2% in FY19E respectively). We recommend a “BUY” rating and assign a PE of 15X on FY19E of INR 13.9 to arrive at a target price INR 208. At CMP of INR 171, EMMBI is currently trading at 23.7x FY17 EPS of INR 7.2, 15.8x on FY18 EPS of INR 10.8 and 12.3x on FY19 EPS of INR 13.9.