BSE ID : 533161 NSE ID : EMMBI
RECOMMENDED PRICE 98.45
PEAK FROM RECO 176.15 78.92%
CURRENT PRICE 168.40 71.05%
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.
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.
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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
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