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SENSEX: 31109.28 81.07

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Multi Baggers

Hem Securities

12.00 AM May 27th 2016

Emmbi Ind

BSE ID : 533161     NSE ID : EMMBI

RECOMMENDED PRICE 98.45

PEAK FROM RECO 209.20 112.49%

CURRENT PRICE 202.50 105.69%

Emmbi Industries Limited (earlier Emmbi Polyarns Ltd.) is one of the region's most well established brands in the field of woven polyethylene and polypropylene product manufacturing. We initiate a 'BUY' on the stock with a target price of Rs 135 with medium to long term investment horizon.

Emmbi Industries Limited

Emmbi Industries Ltd. is a well-established brand in the field of polymer processing. With a prudent track record of more than two decades business in the field of water conservation, logistics, agriculture, packaging, geo-textiles and various other polymer based material. 

The company has received Certificate of Registration from the Department of Scientific and Industrial Research (DSIR), Ministry of science & Technology, Government of India (validity 22nd March, 2016 - 31st March, 2018). 

The company has registered decent results for the quarter ending March 2016. The standalone revenues grew by ~14% to Rs.56.29 crores vs. Rs.49.42 cr. in the year ago quarter. Operating profit grew marginally at Rs.7.12 crores as against Rs 6.96 crores in the corresponding quarter last year. The adjusted net profit surged sharply at Rs.3.71 crore as against Rs.2.88 crore, depicting a sharp growth of ~29% y-o-y. Higher capacity utilization to 82.98% has led to improved profit margins. Shift in product mix towards high margin business and improvement in the working capital cycle as a consequence of increased inclination towards domestic business has helped the company register sharp numbers. 

Emmbi has improved its ability to command premium through Strong Brand Equity and First Mover advantage. The company has strong customer retention in the non-retail segment of its products. The management expects to double the company in next 3-4 years time. 

Valuation

With increasing share of value added high margin products, increasing capacity utilization, improving operational metrics and increasing penetration; the company is set to witness the next leg of growth. We believe the company is trading at an attractive valuation at 12.13x and 9.09x of consolidated FY17EPS of Rs.8.11 and FY18EPS of Rs.10.83. We initiate a 'BUY' on the stock with a target price of Rs.135 (appreciation of about 37%) with the medium to long term investment horizon.

For full details, Click on the attachment.

Disclosure of Interest Statement - Company Name

1. Analyst Ownership of the Stock - No

2. Hem & its Group Company Ownership of the Stock - No

3. Hem & its Group Companies' Director Ownership of the Stock - No

4. Broking relationship with company covered - No

Disclaimer & Disclosure: This document is prepared for our clients only, on the basis of publicly available information and other sources believed to be reliable. Whilst we are not soliciting any action based on this information, all care has been taken to ensure that the facts are accurate, fair and reasonable. This information is not intended as an offer or solicitation for the purchase or sell of any financial instrument and at any point should not be considered as an investment advise. Reader is requested to rely on his own decision and may take independent professional advise before investing. Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited, Directors and any of its employees shall not be responsible for the content. The person accessing this information specifically agrees to exempt Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and further agrees to hold Hem Securities Limited, Hem Finlease Private Limited, Hem Multi Commodities Pvt. Limited or any of its affiliates or employees free and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The companies and its affiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may from time to time, have long or short positions in, and buy or sell the securities there of, company (ies) mentioned here in and the same have acted upon or used the information prior to, or immediately following the publication. Analyst Certification: The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.

EmmbiInds_HemSec_PYT.pdf

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