GENERAL OVERVIEW:

Emami Ltd. is an Indian conglomerate company

headquartered in Kolkata, India. Emami manufactures and
markets personal and healthcare in India and internationally
Emami Limited was founded in 1974 when two childhood
friends, R S Agarwal and R S Goenka, left their management
jobs with the Birla Group to set up Kemco Chemicals, an
Ayurvedic medicine and cosmetic manufacturing unit in
Kolkata in 1974. At that time the Indian FMCG market was NOTABLE ACQUISITIONS-
still dominated by multinationals. Emami reported a revenue
of Rs 26.9 Billion in 2019 and a net income of Rs 3 Billion. • Zandu Pharma in 2008 for Rs 730 crores
• Splash Corp in 2015 for Rs.200 crores.
NOTABLE Brands- • Creme 21 in Feb 2019 for 100 crores.

Quote:
1st April,2020 VALUATION → 17.5% Undervalued

168.55 416.40 Current Price

52 WEEK L/H Rs. 168.55

Fair Value
Rs. 208.02

140.85

3000
2500
YEARLY FIGURES OF NET 2000
1500
SALES TURNOVER AND NET 1000
INCOME 500
0
FY15 FY16 FY17 FY18 FY19

Revenue(In Rs Cr) Net Income(In Rs Cr)

Submitted by Shreyansh Bhura

SHAREHOLDING PATTERN:
Shareholding Pattern TOP 10 shareholders
0.03% 6.62% IDBI Asset Management Limited 25.74%
7.30%
Diwakar Viniyog Private Limited 10.91%
Suntrack Commerce Private Limited 10.82%
Bhanu Vyapaar Private Limited 9.64%
21.59%
52.74% SBI Funds Management Private 7.16%
Limited
Raviraj Viniyog Private Limited 4.73%
11.72% Prabhakar Viniyog Private Limited 4.51%
Suraj Viniyog Pvt. Ltd. 4.41%
Promoters FII/FPI Mutual Funds Priti Sureka 3.64%
Other DIIs Fin Insts Others DSP Investment Managers Pvt. Ltd. 3.38%

Leadership:
1. R.S. Agarwal, Founder & Chairman- He is the co-founder of
Emami. Radhe completed his college education from St. Xavier's College,
Kolkata. He got his LLB from Calcutta University; M. Com from Calcutta
University. Radhe is a Chartered Accountant from Institute of Chartered
Accountants of India and Company Secretary from Institute of Company
Secretaries of India. In 1970 Radhe joined Aditya Birla Group as vice president.
And in 1974 formed Emami with his childhood friend.

2. Sushil Goenka, Managing Director-

Mr. Sushil Kumar Goenka serves as the Managing Director of
Emami Limited and has been an Executive Director since May 17,
1995. Mr. Goenka has 29 years of business experience. He holds the
position of the Secretary of various Trusts such as Aradhana Trust,
Vishwa Jagriti Mission Trust (Kolkata), and Vivekananda Hospital
and Research Center, Kolkata. He serves as a Director of New Way
Constructions Ltd. Mr. Goenka is a commerce graduate.

3. Radhe Goenka, Founder & Whole Time Director-

R. S. Goenka is a Master of Commerce and Bachelor of Law. He served as the
Honorary Consul of Republic of Poland in Kolkata and was the 5th Indian to have
been awarded the Cavalier Cross of the Order of Merit of the Republic of Poland in
2007. He is the Co-Chairman of Indian Cancer Society, Kolkata and President of
Sri Sri Academy besides being associated with several Schools, Charitable Trusts
and Philanthropic organisations. He is a Director-Member of the Managing
Committee of Merchant Chamber of
Commerce & Industry (MCCI).
Average Tenure of Board= 15.3 Years
Average Age of Board= 55 years old

Submitted by Shreyansh Bhura

SWOT analysis
1.Strengths-

Growth in Net Profit with

increasing profit margin
quarterly (YoY)

Increasing Revenue every

quarter for the past 4
quarters

Increasing profits
every quarter for
the past 4 quarters

Submitted by Shreyansh Bhura

 Company
able to
generate Net
Cash -
Improving
Net Cash
Flow for last
4 years

Company with Low Debt

• FII / FPI or Institutions increasing their shareholding over the past

year and more

• High dividends, with rising dividend yields over last five years. It
has a dividend yield of 2.3% as compared to the industry standard
of 1.5%
Submitted by Shreyansh Bhura
 2.Weaknesses-

Inefficient
use of
shareholder
funds - ROE
declining in
the last 5
years

Inefficient use of assets to generate profits - ROA declining in

the last 2 years

Mar'17 Mar'18 Mar'19

Return on Assets(%) 14.18 11.91 11.81

Poor cash
generated
from core
business -
Declining
Cash Flow
from
Operations
for last 2
years

Submitted by Shreyansh Bhura

• Company has high promoter pledge

• Major fall in TTM Net Profit

• Weak performer: Stock lost more than 20% in 1 month

• Weak Momentum: Price below Short, Medium- and Long-Term

Averages

3. opportunities-

• Big Deal (Insider and SAST) buys last month greater than 1% of
total shares

• Company with current TTM PE Ratio less than 3 Year, 5 Year and
10 Year average

• PE Positive breakout ( LTP > R1)

4. Threats-

• Companies where promoters have increased their pledged stocks

• Recent broker downgrades in reco or target price

• RSI indicating price weakness

Submitted by Shreyansh Bhura

Competitive analysis-

Debt to Current
Name Market Cap Sales Turnover EPS Dividend Yield Inventory Turnover Ratio Fixed Asset Turnover Ratio
Equity Ratio

(in crore) (in crore) %

Marico 33773.03 5971 8.78 1.84% 4.84 128.65 0.04 2.41
P&G 33921.47 2946.50 129.12 0.85% 14.48 180.55 0 1.66
Dabur India 75683.35 6273.19 7.13 0.65% 8.56 112.44 0.03 1.40
Godrej Consumer 54274.78 5679.31 17.17 0.39% 9.23 85.21 0 1.12
Colgate 33971.01 4462.43 28.52 1.84% 17.95 169.90 0.05 0.96
Peer Average 46324.73 5066.49 38.14 1.11% 11.01 135.35 0.02 1.51
Emami 8277.51 2658.92 6.72 1.94% 11.63 96.13 0.03 1.44

Name P/E Ratio EV/EBITDA P/B Ratio Book Value/Share Operating Profit Margin ROCE ROE ROA
% % % %
Marico 35.80 34.63 12.70 27.19 21.42% 34.09% 32.26% 24.39%
P&G 79.91 51.63 38.23 280.06 22.48% 62.88% 46.10% 25.68%
Dabur India 57 44.01 18.20 22.47 26.17% 37.75% 31.85% 22.66%
Godrej Consumer 31.23 43.65 14.26 48.19 28.29% 30.69% 35.62% 26.33%
Colgate 41.97 26.62 23.66 53.19 28.54% 70.74% 53.60% 29.52%
Peer Average 49.18 40.11 21.41 86.22 25.38% 47.23% 39.89% 25.72%
Emami 21.60 24.34 8.80 45.48 29.94% 20.00% 14.78% 11.81%
Emami Ltd has been outperformed by its peers on most of the fronts. However, it has
emerged victorious and outperformed its peers on some very crucial fronts. Moreover, my
valuation analysis shows that the stock of Emami Ltd is very undervalued intrinsicly and
most of its peers are overvalued, thus the peers are proving to be an expensive buy. Emami
Ltd has a meagre Market Capitalisation, low EPS,lower BV/share and is even smaller in
terms of Revenue compared to its peers. Emami has also been less efficient in generating
returns from its assets than its peers as is reflected in the Asset Turnover Ratio above. Emami
lags behind its peers on return ratios as well, as we can see above Emami has far lower
ROCE, ROE and ROA when compared to its peers. But when we look at its OPM and
Inventory Turnover, Emami has outperformed its peers. This reflects the efficiency of its
operations.Emami has a better dividend yield than its peers, thus making it a more attractive
buy for long term investors. Moreover, valuation analysis shows that it is valued below its
fair value. Thus, making it a very attractive buy when compared to its overvalued peers.

Submitted by Shreyansh Bhura

CONCLUSION-
Emami Ltd has an excellent balance sheet with
proven track record.
Reward factors
Shareholder Returns Emami Industry
✓ Emami Ltd is an attractive buy, it is trading at 17.5% 7 Day 10.60% 10.40%
below its fair market value.
✓ Earnings are forecast to grow at 25.46% per year. 30 Day -33.50% -9.90%
✓ Earnings grew 9.2% over the past year. 90 Day -45.00% -15.90%
✓ Earnings are expected to grow significantly over the
next 3 years. 1 Year -58.10% -12.80%
✓ Forecast earnings growth (25.5% per year) is above 3 Year -66.90% 8.20%
the savings rate (6.5%).
✓ Return on Equity is forecast to be high in 3 years time.
5 Year -68.40% 20.80%
✓ Interest Payments are well covered by EBIT.

Snowflake analysis
Risk Factors-
❖ Unstable Dividend Track Record.
❖ Highly volatile share price over past 3 months.
❖ PB is overvalued when compared to industry.
❖ Earnings have declined -9.2% over past 5 years.

Submitted by Shreyansh Bhura