Apr 30, 2016

Emami Ltd

Consumer Staples-Household Products

Emami Ltd
Bloomberg Code: HMN IN

BUY

India Research - Stock Broking

Market Leader of Cooling Hair Oil, Beating the Heat

Recommendation (Rs.)

High Margin Products in the Portfolio are expected to drive EBITDA growth
ahead of Sales growth: Recent acquisition of Kesh King Brand, accounts for

Target Price

Beta (x)

25607 / 7850

O/S Shares(mn)

227.0

Face Value (Rs.)

1.0

Shareholding Pattern (%)

Promoters

72.7

FIIs

16.3

DIIs

1.2

Others

9.8

Stock Performance (%)

Absolute

Relative to Sensex

1M

3M

6M

12M

10

(0)

(4)

(3)

14

Source: Bloomberg

Relative Performance*
150
130
110
90

Apr-16

Mar-16

Jan-16

Feb-16

Dec-15

70

Emami

yyCompetition.
yyVolatility in raw material prices.

0.7

Sensex/Nifty

Oct-15

Key Risks

0.2

1368 / 870

Nov-15

At CMP of Rs.1007, the stock is trading at P/E of 29.5x for FY18E. With the
anticipated increase in top line due to high margin products in the portfolio, rising
temperature across India, strong brand positioning, innovation and new product
launches which were favourably received by the market, with strong balance sheet
& financial ratios, we expect that the consumer expenditure will further increase as
the economy revives and hence there will be growth in Emamis top line and bottom
line as well. Based on P/E of 38.5x, we initiate the coverage with a BUY rating
for a Target Price of Rs.1313 representing an upside of 30% for a period of 12-15
months.

3M Avg. daily volume (mn)

52-wk High/Low (Rs.)

Sep-15

Valuation and Outlook

228500 / 3440

Jul-15

The best seller of

all times, Emamis Navratna cooling oil enjoys around 60% of the total market
share. The rising temperature across India is expected to give robust growth to
its Navratna cooling oil, Navratna Cool Talc and to Boroplus prickly heat powder.
Historically, cooling oil has recorded 16% to 17% growth during moderate summer,
so considering the current weather condition it is expected to grow at good pace.

Mkt Cap (Rs.mn/US$ mn)

Aug-15

Market Leader of Cooling Hair oil is beating the Heat:

30

Jun-15

of the total revenue of Emami, with over 200 products in the portfolio under the
Zandu Brand. The company is also expected to extend the brand with couple of
new products; with the most recent launch of Zandu Honey, Emami is currently test
marketing these new products and it is expected to launch these products by the
end of FY17E.

1313

Stock Information

Apr-15

Marching ahead in the league of Herbal Products: Zandu accounts for ~25%

1007

Upside (%)

May-15

around 75% gross margin and 45% EBITDA margin as compared to the other
products in the portfolio. Kesh King Brand is expected to drive the top line growth
by around 8% to 10% additionally. This will enable Emami to record higher margins
in FY17E and FY18E.

CMP (as on Apr 29, 2016)

Sensex

Source: Bloomberg; *Index 100

Exhibit 1: Valuation Summary

YE Mar (Rs. Mn)
Net Sales
EBITDA

EBITDA Margin (%)

FY14

FY15

FY16E

FY17E

FY18E

18208

22172

25334

29473

34504

27.6

24.4

22.8

23.7

25.0

5023

5401

5784

6992

8634

Adj. Net Profit

4025

4856

5240

6309

7743

RoE (%)

47.1

44.9

38.3

37.9

38.1

EPS (Rs.)
P/E (x)

17.7
24.5

21.4
46.8

23.1
40.4

27.8
36.2

34.1
29.5

Source: Company, Karvy Research, *Represents multiples for FY14 & FY15 are based on historic market price

For private circulation only. For important information about Karvys rating system and other disclosures refer
to the end of this material. Karvy Stock Broking Research is also available on Bloomberg, KRVY<GO>,
Thomson Publishers & Reuters

Analyst Contact
Kunal Jagda

040 - 3321 6277

kunalnarendra.jagda@karvy.com

Apr 30, 2016

Emami Ltd

Company Background

Company Financial Snapshot (Y/E Mar)

Profit & Loss (Rs. Mn)
FY15

FY16E

FY17E

FY18E

Net sales

22172

25334

29473

34504

EBITDA

5401

5784

6992

8634

Optg. Exp (Adj for OI)

16772

Depreciation

343

Interest

51

Other Income

383

51

22480

428

51

25870

476

51

918

1197

1371

1570

1070

1309

1577

1935

PBT

5924

Adj. PAT

4856

Tax

19550

6547
5240

7884
6309

9676
7743

Profit & Loss Ratios

EBITDA margin (%)

24.4

22.8

23.7

25.0

P/E (x)

46.8

40.4

36.2

29.5

0.8

1.0

1.1

1.4

Net margin (%)

21.9

EV/EBITDA (x)

41.5

Dividend yield (%)

20.7

35.7

21.4

31.7

22.4

25.4

Source: Company, Karvy Research

Cash Flow (Rs. Mn)

Balance sheet (Rs. Mn)

Total Assets

Net Fixed assets

FY15

FY16E

FY17E

FY18E

16763

20273

24278

29197

5834

7693

10009

13155

16763

20273

24278

29197

194

194

194

194

4776

Current assets
Other assets

6153

Total Liabilities
Networth

12306

Debt

Current Liabilities

3688

Other Liabilities

574

4917
7663

15023

4451

605

5359

5797

8910

10245

18293

22307

5147

6002

645

694

Balance Sheet Ratios

RoE (%)

44.9

RoCE (%)

43.1

38.3
37.0

37.9

38.1

36.7

37.1

Net Debt/Equity (x)

(0.3)

(0.3)

(0.4)

(0.4)

P/BV (x)

18.5

14.1

12.5

10.2

Equity/Total Assets (%)

73.4

74.1

75.3

76.4

Source: Company, Karvy Research

Exhibit 2: Shareholding Pattern (%)

Promoters
72.7%

Source: BSE, Karvy Research

Emami Group established in early 1970s, has grown in India,

with its presence in major sectors like FMCG, Real Estate,
Hospitals, Retail, Newsprint Manufacturing, Pharmacy chain,
Contemporary art, Edible oil and biodiesel. Founded by two
friends Mr. R.S. Agarwal and Mr. R.S. Goenka, today Emami
is a trusted brand of the nation with over 25,000 employees
and with a group turnover of about Rs.100 Bn. Emami Ltd is
one of the leading and fastest growing personal and healthcare
businesses in India, with an enviable portfolio of household
brand names such as Boroplus, Navratna, Fair and Handsome,
Zandu balm, Mentho Plus balm and Fast Relief. With seven
manufacturing locations in India and one in Bangladesh
supported by a widespread distribution network, the company
is positioned to make its products available in every corner of
the country. Emami has received countless accolades for its
innovative and clutter-breaking products, which have carved
out whole new segments from scratch in the Indian FMCG
space and positioned the company as one of the fastest
growing and most profitable companies in the sector.

FY15

FY16E

FY17E

FY18E

PBT*

5924

6547

7884

9676

Tax

(956)

(1309)

(1577)

(1935)

Others

(705)

(1092)

(1265)

(1464)

Capex

(1098)

(500)

(844)

(887)

Depreciation

343

Changes in WC

734

CF from Operations
Investments
Others

5340

Change in Debt

Dividends & Others

CF from Financing

4247

5484

6761

(1000)

(1000)

(2337)

(361)

(531)

(375)

(52)

(51)

(51)

(51)

1139

(2120)

(2523)

814

1311

(2154) (2575)

Change in Cash

15

476

(1000)

19

Interest Paid

(282)

428

(18111)

16871

CF from Investing

383

1313

(3038)

(3090)

1863

1512

(3729)

(3780)

2605

Source: Company, Karvy Research, * Before Exceptional Item

Exhibit 3: Geography-wise Revenue Segmentation - FY15 (%)

FIIs
16.3%

DIIs
1.2%

Domestic
85.7%
International
14.3%

Others
9.8%

Source: Company, Karvy Research

Apr 30, 2016

Emami Ltd

High Margin Products in the Portfolio are expected to drive EBITDA growth ahead of Sales growth:
Exhibit 4: Revenue & EBITDA Growth (%)
25%
20%

21.8%
16.6%

16.9%

15%
10%

20.9%
14.3%

11.8%
12.2%

16.3%

23.5%

17.1%

12.7%

5%

7.2%

7.5%

FY14

FY15

7.1%

0%
FY12

FY13

Revenue Growth (%)

FY16E

FY17E

FY18E

EBITDA Growth (%)

Recent acquisition of Kesh King Brand, accounts for around

75% gross margin and 45% EBITDA margin as compared
to the other products in the portfolio. Kesh King Brand is
expected to drive the top line growth by around 8% to 10%
additionally. This will enable Emami to record higher margins
in FY17E and FY18E. Emami has also launched new Stock
Keeping Units (SKUs) to increase the rural penetration
targeting middle age women.

Source: Company, Karvy Research

Marching ahead in the league of Herbal Products:

Zandu accounts for ~25% of the total revenue of Emami, with over 200 products in the portfolio under the Zandu Brand. The
company is also expected to extend the brand with couple of new products; with the most recent launch of Zandu Honey,
Emami is currently test marketing these new products and it is expected to launch these products by the end of FY17E. The
company has also launched new products in diabetes space, heart care and also related to stress. These products are under
test marketing in South India. The company foresees huge potential in this segment as there is no organized market and can
create market for these brands.

Balms and pain relief segment:

Pain relief is a segment of focus for Emami. The company owns home-grown brands like Mentho Plus Balm, Fast Relief and
category leader Zandu Balm. The pain relief category accounted for 21% of Emamis consolidated sales in FY15. Ayurvedic
positioning and widening rural presence made it possible for these brands to capture the largest market share in these categories.

Market Leader of Cooling Hair oil is beating the Heat:

The best seller of all times, Emamis Navratna cooling oil enjoys around 60% of the total market share. The rising temperature
across India is expected to give robust growth to its Navratna cooling oil, Navratna Cool Talc and to Boroplus prickly heat
powder. Historically, cooling oil has recorded 16% to 17% growth during moderate summer, so considering the current weather
condition, it is expected to grow at good pace.

Hair oils:

Emami plugged a gap in its portfolio through the introduction of Emami 7 Oils in One, a unique oil formula combining seven
Ayurvedic ingredients which are effective for strong and healthy hair growth targeting young girls and women.

Cool oil:

Emami catalysed the cool oil category in India through Navratna Oil, enjoying ~60% market share by volume and 65.5% share
by value. The company is an undisputed leader in the cooling oil category.
Exhibit 5: Key Brands & Presence
56.2%
77.7%

4390

4000

7520

6000

2000
0

11.0%

13.0%

15.0%

Boroplus

Zandu

Fair &
Handsome

17.0%
Navratna

62.6%

3800

60.5%

7370

8000

Exhibit 6: Penetration Level (%)

Market Size (Rs. Mn)

Source: Company, Karvy Research

CAGR (5yrs) (RHS)

80%

80%

60%

60%

40%

70.0%

40%

20%
0%

Market Share (%) (RHS)

20%
0%

26.0%

32.0%

17.0%
Navratna

Boroplus
Penetration (%)

Zandu

Fair &
Handsome

Source: Company, Karvy Research

It is observed that Emami enjoys market leadership position across all the brands. The fastest growing category amongst all is
the Navratna Brand growing at 17% CAGR in last 5 years. However, Navratna has very low penetration across India. The major
market for Navratna cooling oil is North India. With low penetration of Navratna and being the market leader, it is expected to
grow at high pace.
3

Apr 30, 2016

Emami Ltd

Skin care:
Skin care accounted for around 30% of Emamis revenues and a higher share of profits. Emami is the leader in the antiseptic
cream category and in the mens fairness cream segment which it pioneered. Its Navratna Cool Talc (niche cooling positioning)
has substantially increased market share in the cool talc category.

Strong Balance Sheet:

With very moderate level of capital expenditure required in the business, Emami has very strong balance sheet, earning an
average RoE of 42.9% & RoCE of 40.7% in last 4 years. Emami enjoys negative working capital for FY15 and expects to maintain
at same level, which is healthy sign for any business. Its average net debt to equity is -0.3x for last 4 years on consolidated basis.

International Business:
Exhibit 7: International Market Share (%)
100%
93.0% 91.0%

80%
60%
40%

47.0%

45.0%

20%

37.0%

30.0%

0%
Navratna
UAE

Fair & Handsome

Saudi Arabia

Bangladesh

The international business of Emami contributes around 17%

of the total revenue; the international business has recorded
16% CAGR from FY11 to FY15, during Q3FY16 international
business grew by 11% and by 14% in 9MFY16. Emami
also enjoys leadership position in international markets; the
Navratna cooling oil and Fair & Handsome dominate the
markets across UAE, Saudi Arabia and Bangladesh. The
company expects robust growth in top line from international
business going forward.

Source: Company, Karvy Research

Exhibit 8: Geography-wise Revenue Segmentation - Q3FY16 (%)

Exhibit 9: International Revenue Segmentation (%)

MENAP
35.0%
Domestic
83.0%

International
17.0%

SAARC &
SEA
44.0%
CISEE
12.0%
Others
9.0%

Source: Company, Karvy Research

Source: Company, Karvy Research, MENAP: Middle East, North Africa & Pakistan

SAARC & SEA: South Asian Association for Regional Cooperation & South East Asia
CISEE: Commonwealth of Independent States & Eastern Europe

Summary:
Emami has been an interesting growth story in the Indian FMCG sector with a net profit CAGR of more than 20% in the last
five years. We expect that Emami is better positioned for faster growth; driven by (1) its entry into new categories, (2) scale up
of the Zandu Health Care Division (HCD) and (3) growth in international business. Emami looks well placed with strategy of
innovation and creation of strong portfolio of niche products, many of which are based on traditional ayurvedic formulations.
Most of these products have high gross margins - highest among domestic peers, along with the low penetration of most of its
categories, gives the opportunity for strong growth in the years ahead. We expect Emamis top line to grow at 17% CAGR over
FY17E-FY18E assisted along with new launches like She feminine hygiene, HE deodorants, etc. to contribute to additional
revenue growth.

Apr 30, 2016

Emami Ltd

Exhibit 10: Business Assumptions

Y/E Mar (Rs. Mn)

FY15

Revenue

FY16E

FY17E

22172

25334

29473

Revenue Growth (%)

21.8

14.3

16.3

EBITDA

5401

5784

6992

EBITDA Margins (%)

24.4

22.8

23.7

PAT (normalized)

4856

5240

6309

Fully Diluted EPS (Rs.)

21.4

Fully Diluted EPS Growth (%)

20.7

23.1

7.9

FY18E Comments
We expect that Emami is better positioned for faster growth;
driven by (1) its entry into new categories, (2) scale up of
the Zandu Health Care Division (HCD) and (3) growth in
international business, along with the low penetration of most
34504 of its categories, give the opportunity for strong growth in the
years ahead. We expect Emamis top line to grow at 17%
CAGR over FY17E-FY18E assisted along with new launches
like She feminine hygiene, HE deodorants, etc. to contribute
to additional revenue growth.
17.1

Most of the products of Emami have high gross margins highest among domestic peers, the recent acquisition of Kesh
8634
King, which has around 75% gross margin, is expected to
drive the EBITDA growth ahead of Sales growth.
25.0

Emami has been an interesting growth story in the Indian

FMCG sector with a net profit CAGR of more than 20% in
the last five years. With high gross margin products in the
7743
portfolio and better product mix, Emami has earned more
than 20% PAT and it is expected to grow at ~22% CAGR from
FY17E-FY18E.

Emamis EPS has registered CAGR of 9.1% from FY11 to

FY15 and it is expected to register double digit growth during
FY17E and FY18E. Emami has very strong balance sheet,
34.1
earning an average RoE of 42.9% & RoCE of 40.7% in last
4 years, it is expected to maintain its RoE and RoCE at same
level going forward.

27.8

20.4

22.7

Capex (ex. Acquisition) - cash capex

(1098)

(500)

(844)

(887)

Net Debt

(3347)

(4852)

(6716)

(9321)

Net CFO

Free Cash Flow

5340
4243

Source: Company, Karvy Research

4247
3747

5484
4640

6761
5874

Exhibit 11: Karvy vs Consensus

Karvy

Consensus

Divergence (%)

FY16E

25334

26476

(4.3)

FY17E

29473

31691

(7.0)

FY16E

5240

4905

6.8

FY17E

6309

5979

5.5

FY16E

23.1

21.7

6.2

FY17E

27.8

26.8

3.8

Comments

Revenues (Rs. Mn)

We have moderate outlook on volume and realizations growth.
Revenue is expected to grow at CAGR of 16.7% during
FY16E-18E.

PAT (Rs. Mn)

With a net profit CAGR of more than 20% in the last five years
and with high gross margin products in the portfolio and better
product mix, Emami has earned more than 20% PAT and it is
expected to grow at ~22% CAGR from FY17E-FY18E.

EPS (Rs.)

Source: Bloomberg, Karvy Research

Emamis EPS has registered CAGR of 9.1% from FY11-FY15

and it is expected to register double digit growth during FY17E
and FY18E.

Apr 30, 2016

Emami Ltd

Exhibit 12: Revenue (Rs. Mn), Revenue Growth (%)

35000

16.3%
21.8% 14.3%

16.9%

25000

17.1%

30%

34504

29473

25334

22172

Revenue (Rs. Mn)

FY18E

FY17E

FY16E

18208
FY14

10%
0%

FY15

16991

5000

FY13

7.2%

15000

We expect that Emami is better positioned for faster growth driven by

(1) its entry into new categories, (2) scale up of the Zandu Health Care
Division (HCD) and (3) growth in international business, along with the low
penetration of most of its categories, give the opportunity for strong growth
in the years ahead. We expect Emamis top line to grow at 17% CAGR
over FY17E-FY18E assisted along with new launches like She feminine
hygiene, HE deodorants, etc. to contribute to additional revenue growth.

20%

YoY Growth (%)

Source: Company, Karvy Research

Most of the products of Emami have high gross margins - highest among domestic peers, the recent acquisition of Kesh King,
which has around 75% gross margin, is expected to drive the EBITDA growth ahead of sales growth.

6000

26%

23.7%

22.8%

5023

5401

5784

6992

8634

24%

4494

4000

FY13

FY14

FY15

FY16E

FY17E

FY18E

2000
0

28%

EBITDA (Rs. Mn)

Source: Company, Karvy Research

9000
6000

22%

3000

20%

EBITDA Margin (%)

28.2%

22.1%

25.9%

27.0%

26.0%

35%
30%

26.9%

9728

24.4%

12000

7935

26.4%

8000

30%

6599

25.0%

5976

27.6%

4714

10000

Exhibit 14: EBIT (Rs. Mn), EBIT Margin (%)

3753

Exhibit 13: EBITDA (Rs. Mn), EBITDA Margin (%)

FY13

FY14

FY15

FY16E

FY17E

FY18E

25%
20%

EBIT (Rs. Mn)

EBIT Margin (%)

Source: Company, Karvy Research

Exhibit 15: PAT (Rs. Mn), PAT Margin (%)

20.7%

21.4%

6309

4856

4025

3000

18.5%

3147

6000

21.9%

5240

22.1%

22.4%

7743

9000

25%
23%
20%
18%

PAT (Rs. Mn)

FY18E

FY17E

FY16E

FY15

FY14

15%

FY13

Emami has been an interesting growth story in the Indian FMCG sector
with a net profit CAGR of more than 20% in the last five years. With high
gross margin products in the portfolio and better product mix, Emami has
earned PAT margin more than 20% and it is expected to grow at ~22%
CAGR from FY17E to FY18E.

PAT Margin (%)

Source: Company, Karvy Research

Exhibit 16: EPS (Rs.), RoE & RoCE (%)

40

43.1%

38.3% 37.9% 38.1%

34.1

27.8

37.1%
37.0% 36.7%

23.1

45.6%

21.4

10

50%

47.1% 44.9%

17.7

20

39.5%

20.8

30

42.4%

FY13 FY14 FY15 FY16E FY17E FY18E

EPS (Rs.) (LHS)
RoCE (%)

45%
40%
35%
30%
25%

Emamis EPS has registered CAGR of 9.1% from FY11 to FY15 and it is
expected to register double digit growth during FY17E and FY18E. Emami
has very strong balance sheet, earning an average RoE of 42.9% & RoCE
of 40.7% in last 4 years, it is expected to maintain its RoE and RoCE at
same level going forward.

RoE (%)

Source: Company, Karvy Research

Apr 30, 2016

Emami Ltd
Exhibit 17: Company Snapshot (Ratings)
Low
1

High
2

33
33

Quality of Earnings
Domestic Sales
Exports

33

Working Capital Requirement

33

Net Debt/Equity

Quality of Management
Depth of Management
Promoter

Corporate Governance
Source: Company, Karvy Research

33
33
33
33
33

Apr 30, 2016

Emami Ltd

Valuation & Outlook

At CMP of Rs.1007, the stock is trading at P/E of 29.5x for FY18E. With the anticipated increase in top line due to high margin
products in the portfolio, rising temperature across India, strong brand positioning, innovation and new product launches which
were favourably received by the market, with strong balance sheet & financial ratios, we expect that the consumer expenditure
will further increase as the economy revives and hence there will be growth in Emamis top line and bottom line as well. Based
on P/E of 38.5x, we initiate the coverage with a BUY rating for a Target Price of Rs.1313 representing an upside of 30% for a
period of 12-15 months.
Exhibit 18: PE Band
70

60

50

40
Apr-15

May-15

Jun-15

Jul-15

P/E

Aug-15

Sep-15

Average

Oct-15

Nov-15

1SD

Dec-15

Jan-16

2SD

Feb-16

Mar-16

-1SD

Apr-16
-2SD

Source: Bloomberg, Karvy Research

Exhibit 19 (a): Comparative Valuation Summary

CMP (Rs.)

EV/EBITDA (x)

Mcap
(Rs. Mn)

P/E (x)

EPS (Rs.)

FY15

FY16E

FY17E

FY15

FY16E

FY17E

FY15

FY16E

FY17E

Emami Ltd

1007

228500

41.5

35.7

31.7

46.8

40.4

36.2

21.4

23.1

27.8

Marico Ltd

254

32853

28.1

30.1

25.9

46.4

30.2

25.3

4.5

5.8

6.8

GCPL

1381

Source: Bloomberg, Karvy Research

470209

26.9

33.3

28.3

39.1

41.6

34.4

26.6

33.2

39.6

Exhibit 19 (b): Comparative Operational Metrics Summary

CAGR % (FY15-17E)
Emami Ltd

GCPL

Marico Ltd

Source: Bloomberg, Karvy Research

Sales

EBITDA

15.3

13.8

10.3

18.6

12.7

18.5

RoE (%)
EPS
14.0

22.0
22.2

Price Perf (%)

FY15

FY16E

FY17E

3m

6m

44.9

38.3

37.9

(0.1)

(4.0)

36.1

35.1

34.1

16.9

32.2

22.1

24.1

24.1

7.9

2.2

Net Sales (Rs. Mn)

12m
7.4

22.3
29.6

FY15
22172

82422
57203

FY16E
25334

90408
61879

FY17E
29473

104638

69564

Apr 30, 2016

Emami Ltd

Peer Comparison
Exhibit 20: Revenue Growth (%)
25%

Exhibit 21: EBITDA Margin (%)

30%

21.8%

20%
14.3%

15%
10%

16.3%

27.6%
24.4%

25%

22.8%

20%

7.2%

15%

5%

10%

0%
FY14

FY15

Emami

FY16E
GCPL

FY14

FY17E

FY15

Emami

Marico

FY16E
GCPL

Source: Bloomberg, Karvy Research

Source: Bloomberg, Karvy Research

Exhibit 22: RoE (%)

Exhibit 23: Dividend Payout Ratio (%)

50%

23.7%

47.1%

60%

44.9%
38.3%

40%

54.4%
45.0%

50%
37.9%

46.2%

40%
30%

30%

FY17E
Marico

38.7%

27.0%

20%
20%
FY14
Emami

FY15

FY16E
GCPL

Source: Bloomberg, Karvy Research

FY17E
Marico

10%
FY11

FY12

Emami

FY13
GCPL

FY14

FY15
Marico

Source: Bloomberg, Karvy Research

Key Risks
yyCompetition.

yyVolatility in raw material prices.

Apr 30, 2016

Emami Ltd

Financials
Exhibit 24: Income Statement
YE Mar (Rs. Mn)

FY14

FY15

FY16E

FY17E

FY18E

Revenues

18208

22172

25334

29473

34504

Operating Expenses

13185

16772

19550

22480

25870

11.8

7.5

7.1

20.9

23.5

Growth (%)
EBITDA

Growth (%)

Depreciation & Amortization

7.2

5023

21.8

5401

14.3

5784

6992

8634

343

EBIT

4714

5976

PBT

4571

5924

6547

7884

9676

Adjusted PAT

4025

4856

5240

6309

7743

Interest Expenses
Tax

Growth (%)

653
54

547

27.9

428

17.1

961

Other Income

383

16.3

476

918

1197

1371

1570

51

51

51

51

1070
20.7

6599

1309
7.9

7935

1577
20.4

9728

1935
22.7

Source: Company, Karvy Research

Exhibit 25: Balance Sheet

YE Mar (Rs. Mn)

FY14

FY15

FY16E

FY17E

FY18E

Cash & Cash Equivalents

2700

3541

5046

6910

9515

Inventories

1411

1267

1589

1867

2198

Investments

2892

Trade Receivables

Loans & Advances & Others

Net Block

Total Assets

Current Liabilities & Provisions

Debt

Other Liabilities

793

1149
4078

1027
1206
4946
4776

1057
1716
5946
4917

1232
1963
6946
5359

1443
2298
7946
5797

13023

16763

20273

24278

29197

218

194

194

194

194

3146

338

3688

574

4451

605

5147

645

6002

694

Total Liabilities

3702

4457

5250

5985

6890

Reserves & Surplus

9094

12079

14796

18066

22080

Shareholders Equity
Total Networth

Total Networth & Liabilities

227

9321

13023

227

12306
16763

227

15023
20273

227

18293
24278

227

22307
29197

Source: Company, Karvy Research

10

Apr 30, 2016

Emami Ltd
Exhibit 26: Cash Flow Statement
YE Mar (Rs. Mn)

FY14

FY15

FY16E

FY17E

FY18E

PBT (Before Exceptional Item)

4660

5924

6547

7884

9676

Tax Paid

(766)

(956)

(1309)

(1577)

(1935)

Other Income

(586)

(1491)

(1093)

(1267)

(1466)

Cash flow from operating activities

4325

5340

4247

5484

6761

Depreciation

Inc/dec in Net WC
Other non cash items

Inc/dec in capital expenditure

Inc/dec in investments

352
596
69

(654)

343
734
786

(1098)

383

(282)
2

(500)

428
15
2

(844)

476
8
2

(887)

(13052)

(18111)

(1000)

(1000)

(1000)

Cash flow from investing activities

(1419)

(2337)

(361)

(531)

(375)

Dividend paid

(2211)

(2120)

(2523)

(3038)

(3729)

21

(35)

Others

Changes in Debt
Interest paid

Effect of Forex Fluctuation

Cash flow from financing activities

Net change in cash

12287

(751)
(51)

(3013)

(128)

16871

19

(52)

1139

(51)

1313

(51)

1512

(51)

(2154)

(2575)

(3090)

(3780)

814

1311

1863

2605

Source: Company, Karvy Research

Exhibit 27: Key Ratios

YE Mar

FY14

FY15

FY16E

FY17E

FY18E

EBITDA Margin (%)

27.6

24.4

22.8

23.7

25.0

Net Profit Margin (%)

22.1

21.9

20.7

21.4

22.4

EBIT Margin (%)

Dividend Payout Ratio (%)

25.9
46.2

27.0
38.7

26.0
40.0

26.9
40.0

28.2
40.0

Net Debt/Equity (x)

(0.3)

(0.3)

(0.3)

(0.4)

(0.4)

RoCE (%)

45.6

43.1

37.0

36.7

37.1

RoE (%)

Source: Company, Karvy Research

47.1

44.9

38.3

37.9

38.1

Exhibit 28: Valuation Parameters

YE Mar

FY14

FY15

FY16E

FY17E

FY18E

EPS (Rs.)

17.7

21.4

23.1

27.8

34.1

BV (Rs.)

41.1

54.2

66.2

80.6

98.3

P/BV (x)

10.6

18.5

14.1

DPS (Rs.)
PE (x)

EV/EBITDA (x)
EV/Sales (x)

8.2

24.5
19.2

5.3

8.3

46.8
41.5
10.1

9.2

40.4
35.7

8.2

Source: Company, Karvy Research; *Represents multiples for FY14 & FY15 are based on historic market price

11.1
36.2
12.5
31.7

7.5

13.6
29.5
10.2
25.4

6.4

11

Apr 30, 2016

Emami Ltd
Stock Ratings
Buy

Sell

Hold

Absolute Returns
> 15%

5-15%
<5%

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