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Table of Contents
Company Background
Products
Board of Directors
Management and Analysis Report
Competitor Analysis
Shareholding Pattern
Summary chart
Promoters’ Shareholdings
P&L Account and Balance Sheet
Ratio Analysis
Projections
WACC
FCFF and FCFE
Conclusion- Why to invest in Emami Ltd. ?
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Company Background-
Emami Limited 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, Fast Relief and Kesh King.
Established in 1974, Emami have a portfolio of over 300 products based on ayurvedic
formulations. Their current operations comprise more than 60 countries including GCC, Europe,
Africa, CIS countries and the SAARC. Over 121 Emami products are sold every second some
where around the world. Emami Limited, the flagship company of the Group, recorded a
turnover of Rs 2533 crore, 2016-17. They employ 3100 people, reach out to 40 lakh plus retails
outlets through a network of 3250 distributors and have invested in Eight plants, Four regional
offices, 1 overseas unit, Eight overseas subsidiaries and 33 distribution centres across India.
Emami acquired the heritage brand Zandu on the basis of huge business synergy between the
two brand portfolios.
Emami also acquired Ayurvedic Hair & scalp business of "Kesh King" as a business strategy.
Products-
For more than 35 years Emami has been innovating and launching brands meeting multiple
consumer needs, spanning across various income groups, for young to old and everyone in -
between. They are passionate about creating best in class and affordable brands in health and
personal care markets.
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Product Name Category
Navratana Oil
HE Deodrants
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Board of Directors
Designation Name
R S Agarwal
Chairman
Sushil K Goenka
Managing Director
R S Goenka
Whole-time Director
K N Memani
Director
Y P Trivedi
Director
Amit Kiran Deb
Director
S B Ganguly
Director
Mohan Goenka
Director
Aditya Vardhan Agarwal
Director
Harsh Vardhan Agarwal
Director
Priti A Sureka
Director
P K Khaitan
Director
M D Mallya
Director
Prashant Goenka
Director
Rama Bijapurkar
Director
C K Dhanuka
Independent Director
A K Joshi
Vice President & CS
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Management & Analysis Report-
Capital Market
- Shareholders’ wealth increased more than 46 times and more than 10 times following
the public issue in March 2005 and QIP in July 2009 respectively.
Operations
- Direct reatail reach increased to 7.3 Lacs outlrts along with distributor strength of 3250.
- New unit at Pacharia, Guwahati, commenced operations in February 2017. Planned
outlay of Rs.300 cr.
Working Capital
Brands
- Brand extension Cool Talcum Powder gain market share by 40bps to 25.6%
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Competitor Analysis-
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Shareholding Pattern-
2. Non-Institutions
a. Body Corporate 4.58 5.21
b.i. Individuals (Nominal Share 3.54 3.65
Capital <= Rs.100,000)
b.ii. Individuals (Nominal Share 0.19 0.19 4.32 3.76 3.81
Capital > Rs.100,000)
c. Any Others (Trusts, NRI, etc.) 0.25 0.23 5.53 4.41 4.67
Sub-Total (2) 8.55 9.28 9.85 8.17 8.48
Total Public Shareholding (B) 27.26 27.26 27.26 27.26 27.26
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Summary Chart-
100%
90%
80%
70%
60%
Public- Non-Institution
50%
Public- Institution
40% Promoters
30%
20%
10%
0%
2013 2014 2015 2016 2017
Promoters’ Shareholding:-
As a %
of
As a % of grand
% of Total
Number grand total Number total
shares held
(A) + (B) + (C) (A) +
(B) +
(C)
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Tmt Viniyogan Limited 4,866,580 0 1,580,000 32.47 -
P&L account-
Emami
Standalone Profit & -------------------
Loss account in Rs. Cr. ------
-------------
Mar 17 Mar-16 Mar-15 Mar-14 Mar-13 CAGR
INCOME
Revenue From 2337.87 2426.21 2066.07 1738.13 1661.91 9%
Operations [Gross]
Less: Excise/Sevice 39.57 39.2 39.53 33.05 34.82
Tax/Other Levies
Revenue From 2298.3 2387.01 2026.54 1705.08 1627.09
Operations [Net]
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Cost Of Materials 644.53 606.22 589.53 543.97 539.18 5%
Consumed
Tax Expenses-
Continued Operations
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Less: MAT Credit 14 0 0 0 0
Entitlement
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Balance sheet-
Emami
Standalone Balance --------------
Sheet ----- in Rs.
Cr. ---------
----------
Mar 17 Mar-16 Mar-15 Mar-14 Mar-13 CAGR
EQUITIES AND
LIABILITIES
SHAREHOLDER'S FUNDS
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Liabilities
CURRENT LIABILITIES
Short Term Borrowings 134.7 360 8.38 1.31 16.36 69%
Trade Payables 148.62 185.76 126.58 114.61 82.27 16%
Other Current Liabilities 356.69 57.44 58.51 46.88 54.9
Short Term Provisions 23.73 206.2 98.2 120.88 164.64
Total Current Liabilities 663.74 809.41 291.68 283.67 318.16 20%
Total Capital And 2454.97 2503.07 1555.87 1260.47 1151.98
Liabilities
ASSETS
NON-CURRENT ASSETS
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OTHER ADDITIONAL
INFORMATION
CONTINGENT
LIABILITIES,
COMMITMENTS
EXPENDITURE IN
FOREIGN EXCHANGE
Expenditure In Foreign 4.84 6.17 5.95 6.64 11.89
Currency
REMITTANCES IN
FOREIGN CURRENCIES
FOR DIVIDENDS
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CURRENT INVESTMENTS
Current Investments - - - - -
Quoted Market Value
Ratio Analysis
1. Receivables Turnover Ratio (RTO)
This ratio indicates the number of times company convert’s its receivables (debtors) into cash.
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
-10.00
2017 2016 2015 2014 2013
Debtors Turnover 68.75 46.61 37.37 23.50 20.93
YoY sales 0.47 0.25 0.59 0.12
YoY Rec. -0.34 -0.09 -0.24 -0.07
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2 . Inventory Turnover Ratio (ITO)
This ratio indicates the number of times inventory of the company is converted into sales.
6.00
5.00
4.00
3.00
2.00
1.00
0.00
-1.00
2017 2016 2015 2014 2013
Inventory turnover 3.81 4.24 4.98 3.98
YoY COGS 0.06 0.03 0.08 0.01
YoY Avg Invt. 0.18 0.21 -0.13 0.22
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
2017 2016 2015 2014 2013
Payable Turnover
2.51 3.2 2.6 2.1 2.06
Ratio (PTO)
YoY COGS 0.06 0.03 0.08 0.01
YoY Avg Pay. -0.20 0.47 0.10 0.39
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4.Cash Cycle-
Cash Cycle tells us about the cash requirement of the company, i.e. the number of days for
which company’s cash is tied-up.
180
160
140
120
100
80
60
40
20
0
2017 2016 2015 2014 2013
Cash Cycle 165 171 129 106 96
RTO days 5.31 7.83 9.77 15.53 17.44
ITO days 94.51 85.00 72.33 90.42 74.95
Payables days 84.16 111.84 78.37 76.90 55.69
6.00
4.00
2.00
0.00
-2.00
-4.00
-6.00
-8.00
2017 2016 2015 2014 2013
Total Asset Turnover
1.23 1.25 5.02 4.73 4.50
Ratio
Working Capital Turnover
-7.33 -5.69 2.77 3.23 4.46
Ratio
Capital Turnover Ratio 1.37 1.47 1.75 1.87 2.09
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6. Quick Ratio
Quick Ratio indicates the firm’s ability to meet its CL using Quick Assets (CA – Inventory). Higher
the ratio better for the company.
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
-0.50
-1.00
2017 2016 2015 2014 2013
Quick Ratio 0.26 0.30 3.22 2.45 1.83
YoY Quick asset -0.28 -0.74 0.35 0.19
YoY CL -0.18 1.77 0.03 -0.11
7. Profit Margin
Profit Margin Here company’s various profit (EBITDA, EBIT, EBT & EAT) margins are displayed.
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
2017 2016 2015 2014 2013
EBITDA Margin 0.34 0.29 0.30 0.32 0.25
EBIT Margin 0.21 0.18 0.29 0.27 0.17
EBT Margin 0.18 0.16 0.28 0.26 0.17
Net Profit Margin 0.15 0.14 0.22 0.23 0.13
YoY Sales 0.47 0.25 0.59 0.12 0.00
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8. DuPont Analysis
DuPont Analysis gives an overall view of the company’s performance. It indicates company’s
profitability, efficiency, how well can it pay its interest & taxes and lastly how well a company is
utilising shareholder’s fund. Thus, indicating how much profit company has made using
shareholder’s fund (ROE).
2.50
2.00
1.50
1.00
0.50
0.00
Operating Capital Financial Financial
Tax Effect ROE (A x B
Profit Turnover Cost Ratio Structure
Ratio (E) x C x D x E)
Margin (A) (B) (C) Ratio (D)
2017 0.20 1.37 0.88 1.00 0.82 0.20
2016 0.18 1.79 0.88 0.82 0.86 0.20
2015 0.27 1.75 0.99 1.00 0.82 0.39
2014 0.26 1.90 0.99 0.98 0.88 0.42
2013 0.17 2.17 0.98 0.97 0.81 0.28
Company’s current financial position can be understood with above final statements and ratios.
We can use further use these information to make projection for next five(5) years with the
help of CAGR and sales.
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Projections – March 2018 – 2022
12 mths
INCOME
Revenue From Operations
[Gross] 2337.87 7% 2503.0 2679.8 2869.1 3071.8 3288.8
Less: Excise/Sevice Tax/Other
Levies 39.57 3% 40.6 41.6 42.7 43.8 45.0
EXPENSES
Changes In Inventories Of
FG,WIP And Stock-In Trade -13.2 10% -14.6 -16.1 -17.7 -19.5 -21.5
Employee Benefit Expenses 194.96 14% 222.8 254.6 290.9 332.5 379.9
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Profit/Loss Before
Exceptional, ExtraOrdinary
Items And Tax 421.91 9% 459.74 500.9591 545.8753 594.8187 648.150481
Profit/Loss Before
Exceptional, ExtraOrdinary
Items And Tax 421.91 9% 459.74 500.9591 545.8753 594.8187 648.150481
Exceptional Items 0
Tax Expenses-Continued
Operations
Profit/Loss For The Period 346.37 9% 378.71 414.0624 452.7188 494.9841 541.195313
OTHER ADDITIONAL
INFORMATION
Basic EPS (Rs.) 15.26 -7% 14.26 13.32941 12.45773 11.64306 10.8816636
Diluted EPS (Rs.) 15.26 -7% 14.26 13.32941 12.45773 11.64306 10.8816636
VALUE OF IMPORTED AND
INDIGENIOUS RAW
MATERIALS
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Indigenous Stores And Spares 0 -100% 0.00 0 0 0 0
12 mths
SHAREHOLDER'S FUNDS
Equity Share Capital 22.7 8% 24.62 26.70 28.96 31.40 34.06
Total Share Capital 22.7 8% 24.62 26.70 28.96 31.40 34.06
Reserves and Surplus 1689.86 17% 1981.57 2323.64 2724.75 3195.11 3746.66
Total Reserves and Surplus 1689.86 17% 1981.57 2323.64 2724.75 3195.11 3746.66
Total Shareholders Funds 1712.56 17% 2005.65 2348.91 2750.91 3221.71 3773.09
Deferred Tax Liabilities [Net] 43.71 26% 55.14 69.56 87.76 110.71 139.66
Other Long Term Liabilities 12.94 8% 13.98 15.10 16.32 17.63 19.05
Long Term Provisions 22.03 26% 27.84 35.17 44.44 56.15 70.95
Total Non-Current Liabilities 78.68 7% 84.07 89.82 95.97 102.55 109.57
CURRENT LIABILITIES 0.00 0.00 0.00 0.00 0.00
Short Term Borrowings 134.7 52% 205.35 313.04 477.22 727.50 1109.05
Trade Payables 148.62 13% 167.28 188.28 211.92 238.53 268.48
Other Current Liabilities 356.69 45% 518.60 754.01 1096.28 1593.92 2317.45
Short Term Provisions 23.73 -32% 16.11 10.93 7.42 5.04 3.42
Total Current Liabilities 663.74 16% 768.90 890.72 1031.83 1195.31 1384.68
Total Capital And Liabilities 2454.97 16% 2856.05 3322.67 3865.51 4497.04 5231.76
OTHER ADDITIONAL
INFORMATION 0.00 0.00 0.00 0.00 0.00
CONTINGENT LIABILITIES,
COMMITMENTS 0.00 0.00 0.00 0.00 0.00
Expenditure In Foreign
Currency 4.84 -16% 4.04 3.38 2.82 2.36 1.97
REMITTANCES IN FOREIGN
CURRENCIES FOR
DIVIDENDS
Dividend Remittance In
Foreign Currency 378.85
EARNINGS IN FOREIGN
EXCHANGE
FOB Value Of Goods 73.06 -3% 70.85 68.72 66.64 64.63 62.68
Other Earnings 18.01 62% 29.16 47.20 76.40 123.68 200.22
BONUS DETAILS
Bonus Equity Share Capital 13.18 19% 15.63 18.53 21.98 26.07 30.91
NON-CURRENT
INVESTMENTS
Non-Current Investments
Quoted Market Value 94.36 38% 129.96 178.99 246.52 339.54 467.64
Non-Current Investments
Unquoted Book Value 0.47 -33% 0.31 0.21 0.14 0.09 0.06
CURRENT INVESTMENTS
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FCFF & FCFE-
FCFF
FCFF is the acronym of Free Cash Flow to Firm. FCFF is the cash flow generated by the firm
before debt payment but after reinvestment needs and taxes. FCFF helps in estimating the
value of the entire firm, by discounting the projected FCFF using WACC.
FCFF is the cash flow available to the suppliers of capital after all operating expenses (including
taxes) are paid and working and fixed capital investments are made.
FCFF = EBIT – Taxes + Depreciation (non-cash costs) – Capital Spending – Increase in Net
Working Capital – Change in Other Assets + Terminal Value
FCFE
FCFE is the acronym of Free Cash Flow to Equity. FCFE is the cash flow after taxes, reinvestment
needs, and debt cash flows. Using FCFE, one can directly calculate the value of equity by
discounting the projected FCFE by the cost of equity.
It is the cash flow available after all operating expenses, interest, and principle repayments
have been made and necessary investments in working capital and fixed capital have been
made.
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FCFF 4350.87 3428.9 1329.07 1187.05 1449.91
FCFE 8645.865 6281.95 1840.385 1391.508 1766.866
-Brands like Fair & Handsome (now with a wide men’s personal care portfolio)
are available in only 1.4m out of the 4.3m outlets that HMN reaches across the
country. Balms is another category, where penetration is low at 36% (Zandu
balm reaches only 1.6m outlets, andMentho Plusonly 1.2m outlets).
-While Zandu is already strong with its balms and Chyawanprash products, it can
also emerge as a strong Ayurvedic products brand. Management believes that
the company’s strength lies in its ability to validate product efficacy on the basis
of data derived from systematic scientific research at NABL and Ministry of
AYUSH accredited laboratories.
-HMN spends more on R&D than most FMCG companies in India; it incurred
INR231m (0.99% of sales) in FY17.
-Some of the prominent new launches in FY17 were Boroplus Perfect Touch
Cream, Navratna Almond Cool Oil, Navratna i-Cool Talc, Fair & Handsome 100%
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Oil Clear Instant Fairness Face Wash, He Respect deodorant, He Range of
perfumes and deodorants, Kesh King Ayurvedic Medicinal Oil with blend of
coconut oil, and He ‘On-the-Go’ Waterless Face Wash.
-Valuations at 31.6x FY19E EPS are inexpensive relative to peers. We like the
company’s healthy long-term earnings growth prospects and return ratios in the
mid-30s.
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