29 October 2015
2QFY16 Results Update | Sector: Consumer
Emami
BSE SENSEX
27,251
Bloomberg
Equity Shares (m)
M.Cap. (INR b)/(USD
b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
Financials & Valuation (INR b)
Y/E MAR
Sales
EBITDA
NP
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoE (%)
RoCE (%)
P/E (x)
P/BV (x)
2015 2016E 2017E
22.2
5.4
4.9
21.4
20.7
54.2
44.9
44.0
49.1
19.4
27.2
7.5
6.0
26.5
24.0
69.0
43.1
36.9
39.6
15.2
33.0
9.2
7.6
33.7
26.9
86.8
43.2
34.5
31.2
12.1
Estimate change
TP change
Rating change
S&P CNX
8,235
HMN IN
227.0
238.2/3.7
1368 / 705
-11/14/39
217
27.3
CMP: INR1,050
TP: INR1,350 (+29%)
Buy
Mixed performance, seasonality impacts organic revenue growth
Emami’s 2Q16 performance was mixed bag
with 17.4% sales growth to INR 5.7b
(est. INR6.2b) and underlying domestic volume growth of 13.5%. Overall volumes
were up 12.6% while like to like volume grew mere 1%, impacted due to
seasonality in Oils and Balms portfolio (45% of business in 2Q) and overall market
sluggishness. EBITDA posted healthy 34.5% growth to INR1.5b (est. INR1.6) and
Adjusted PAT grew 33% YoY to INR1.2b (est. INR1.1b).
Domestic sales grew 19.5% YoY
while International business posted sales growth
of 11.5% and CSD segment sales were flat. Kesh King posted revenues of INR 520m
and contributed 10% to revenue growth; however up-stocking by earlier
distributors which resulted in higher inventory in trade has impacted the brand’s
performance. Given the high inventory in market, it has also impacted the pricing
discipline as few distributors are selling at lower price to the trade vs. Emami, this
trends should stabilize in another 2 months, as per management.
Gross margin expanded 440bp YoY to 70.6%
led by benign input costs, benefit of
Kesh King sales and price increases taken in certain products of the portfolio.
However higher ad spends (up 100bp YoY) curtailed EBITDA margin expansion to
340bp YoY to 26.5% (est. 25.7%).
Portfolio Performance:
Zandu HCD, Boroplus Antiseptic Cream and Fair and
Handsome posted 45%, 16% and 10% growth while Navratna Cooling Oil and
Balms sales grew 0% and 3% resp. HMN maintained its market shares across key
brands and expanded Navratna cooling oil market share by 560bp YoY.
Valuation & View:
Though 2Q16 organic revenue performance was impacted by
seasonality, we continue to like Emami given its strong medium term earnings
visibility post the Kesh King acquisition (45% EBITDA margin business turning EPS
accretive in 2nd year). Emami’s track record of driving synergies from Zandu
acquisition gives us conviction on the potential upside from Kesh King over next 3-
4 years. Scale up of Health Care business is also on track with strong growth
delivery. It remains amongst our top ideas given the strong earnings visibility and
potential to address larger size of prize. Stock trades at 39.6x and 31.2x FY16 and
FY17E EPS, Maintain BUY rating with target price of 1350 (37x Sep’17 EPS).
FY16
2Q
13.5
5,746
17.4
1,690
4,056
70.6
2,533
44.1
1,523
26.5
34.5
103
191
129
1,358
139
10.2
1,217
32.9
609
638
FY15
3QE
11.0
8,536
23.3
2,518
6,018
70.5
3,124
36.6
2,894
33.9
36.8
114
181
138
2,736
512
18.7
2,224
21.1
625
1,597
4QE
11.0
7,016
26.7
2,277
4,739
67.5
2,650
37.8
2,089
29.8
48.9
127
181
138
1,918
359
18.7
1,559
12.9
625
932
11.8
22,173
21.8
7,752
14,420
65.0
9,020
40.7
5,400
24.4
22.4
356
139
1,006
5,912
1,070
18.1
4,841
20.5
0
4,841
FY16E
12.6
27,196
22.7
8,501
18,695
68.7
11,193
41.2
7,502
27.6
38.9
444
587
598
7,070
1,049
14.8
6,021
24.4
2,000
4,021
(INR Million)
FY16
Var.
2QE
(%)
11.0
6,169
-6.9%
26.0
1,968
-14.1%
4,201
-3.4%
68.1
2,616
-3.1%
42.4
1,585
-3.9%
25.7
40.0
103
181
15
1,316
3.2%
196
14.9
1,120
8.7%
20.7
625
493
Quarterly Performance
Y/E MARCH
Vol ume Growth (%)
Net Sales
YoY Cha nge (%)
COGS
Gross Profit
Gros s ma rgi n (%)
Other Expendi ture
% to s a l es
EBITDA
Ma rgi ns (%)
YoY Cha nge
Depreci a ti on
Interes t
Other Income
PBT
Ta x
Ra te (%)
PAT
YoY Cha nge (%)
Amorti za ti on
Reported PAT
E: MOSL Es ti ma tes
1Q
12.5
4,817
25.6
1,858
2,959
61.4
2,209
45.9
750
15.6
26.7
44
8
223
921
213
23.1
708
16.7
0
708
FY15
2Q
11.5
4,896
20.4
1,655
3,241
66.2
2,109
43.1
1,132
23.1
29.6
102
13
149
1,165
250
21.5
915
14.5
0
915
3Q
11.0
6,923
18.4
2,267
4,656
67.3
2,541
36.7
2,115
30.6
19.7
99
45
338
2,309
472
20.4
1,837
21.9
0
1,837
4Q
12.0
5,537
24.2
1,973
3,563
64.4
2,161
39.0
1,403
25.3
18.9
110
73
297
1,516
135
8.9
1,381
21.5
0
1,381
1Q
15.0
5,899
22.4
2,016
3,883
65.8
2,886
48.9
997
16.9
32.9
99
43
185
1,039
39
3.8
997
40.7
126
877
Gautam Duggad
(Gautam.Duggad@MotilalOswal.com); +91 22 3982 5404
Manish Poddar
(Manish.Poddar@MotilalOswal.com); +91 22 3027 8029/
Vishal Punmiya
(Vishal.Punmiya@MotilalOswal.com)
Investors are advised to refer through disclosures made at the end of the Research Report.
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

Emami
Key quarterly charts
Exhibit 1: Revenues grew 17% in 2Q; missed est. by 7%
Sales (INR b)
16
16
20
13 13 13
7
(1)
Sales Growth (%)
24 22
18
17
20
26
Exhibit 2: …with underlying volume growth of 13.5%
Volume growth (%)
13 12 13
Source: Company, MOSL
Source: Company, MOSL
Exhibit 3: Gross margins sharply expanded 440bp YoY led by
benign RM prices; at an all-time high of 70.6%
Gross Margins (%)
Exhibit 4: EBITDA margin expanded by 340bp YoY
EBITDA Margin (%)
Source: Company, MOSL
Source: Company, MOSL
Exhibit 5: Ad spends were up 100bp in 2Q16
Adspends (%)
Exhibit 6: Average Mentha oil prices were up 39% YoY in
2QFY16
2,000
1,500
1,000
705
500
1615
965
Mentha Oil prices INR / kg
Source: Company, MOSL
Source: Bloomberg, MOSL
29 October 2015
2

Emami
Revenue growth missed estimates; ~13.5% underlying domestic volume
growth; like to like volumes up 1%
Emami’s 2Q16 performance missed our expectations with 17.4% sales growth to
INR 5.7b (est. INR6.2b) and underlying domestic volume growth of 13.5% (Kesh
King posted INR520m in sales and added 10% to growth). Overall volumes were
up 12.6%. Organic volumes were up just 1%.
EBITDA posted healthy 34.5% growth (4% below of our estimates). Higher
interest outflow (INR191m) partially offset by lower tax rate (down 300bp YoY)
boosted PAT growth of 33% YoY to INR1.2b (est. INR1.1b).
Domestic sales grew 19.5% YoY while International business posted sales growth
of 11.5% and CSD segment sales were flat.
Kesh King posted revenues of INR 520m, however up-stocking by earlier
distributors which resulted in higher inventory in trade has impacted the brand’s
performance. Except Uttar Pradesh, Maharashtra and Ahmedabad rest of the
markets have exhausted the inventory but it should take another 2 months for
trends to normalize, as per management. Given the high inventory in market, it
has also impacted the pricing discipline as few distributors are selling at lower
price to the trade vs. Emami, per management.
Gross margin expanded 440bp YoY to 70.6% led by benign RM prices, benefit of
Kesh King sales and price increases taken in certain products of the portfolio.
However increased ad spends (up 100bp YoY) curtailed EBITDA margin
expansion to 340bp YoY to 26.5% (est. 25.7%). Thus EBITDA posted healthy
34.5% YoY growth to INR1.5b (est. INR1.6b).
Higher interest expenses of INR191m dragged reported PAT growth to 33% to
INR1.2b (est. INR1.1b).
Exhibit 7: Double digit growth across brands; Oils and Balms which have 45% of business in 2Q were impacted by seasonality
Category Performance
Boroplus Antiseptic Cream
Balms
Fair & Handsome
Navratna Cool Oil
Zandu HCD
International
CSD
1Q14
NA
7%
16%
9%
27%
25%
24%
2Q14
30%
0%
20%
6%
28%
27%
14%
3Q14
-3%
9%
12%
6%
31%
37%
-14%
4Q14
NA
-5%
-2%
5%
52%
9%
42%
1Q15
-16%
13%
14%
14%
32%
104%
6%
2Q15
NA
12%
16%
22%
30%
33%
16%
3Q15
19%
15%
21%
27%
18%
21%
16%
4Q15
1Q16
2Q16
43%
12%
16%
10%
27%
3%
9%
20%
10%
14%
17%
0%
24%
28%
45%
48%
22%
12%
11%
6%
-1%
Source: Company, MOSL
29 October 2015
3

Emami
Exhibit 8: 560bp YoY market share gain in Navratna cooling oil while others maintained
their shares
73.2
Market Share (%) as on 2Q16
55.7
26.7
12.1
62.0
75.5
Navratna
Cooling Oil
Navratna
Cooling Talc
Zandu &
Mentho Plus
Balm
Fair and
Handsome
cream
Boroplus
Anticeptic
Cream
FAH face wash
Source: Company, MOSL
Brand-wise performance
Navratna:
-
Navratna
Cooling Oil sales were flat YoY. Market share improved 560bp YoY
to 73.2% in 2QFY16.
-
Navratna
Cool Talc saw sales decline of 20% YoY but maintained market
share at 26.7% in 2QFY16.
Balms:
Sales grew by 3% YoY impacted by lack of rainfall in western region while
segment maintained its market share of 55.7% in 2QFY16.
Fair and Handsome:
-
Fair and Handsome
cream sales were up 10% YoY. The brand maintained its
leadership with market share of 62% in 2QFY16.
-
Fair and Handsome
instant fairness face wash performed well with market
share at 12.1% in 2QFY16.
Boroplus:
- Antiseptic cream maintained its market leadership (75.5% market share)
and posted 16% sales growth in 2QFY16.
- Prickly heat powder sales grew by 10% during the quarter.
Zandu Healthcare Division
continued its robust performance and posted sales
growth of 45% YoY.
Pancharishta
posted sales growth of more than 100% YoY in
2QFY16.
International
sales grew by 12% during the quarter.
CSD
(~4% of sales) sales were almost flat in 2QFY16.
Others:
Kesh King
contributed 10% to domestic sales growth in 2QFY16;
7 Oils in
One
saw sales growth of 150% YoY in 2QFY16.
Concall highlights
29 October 2015
Volume growth of 12.6%. Kesh King contributed 10% of the growth in 2Q and
7% of growth in 1H. Like to like volume growth of 1%, impacted by Seasonality
(Oils and Balms which contribute 45% of business in 2Q) and market
sluggishness.
North and West growth was lower compared to other regions.
Domestic business volume growth of 13.5%, revenue growth of 19.5%. 1H
volume growth of 14.5%.
Excluding Kesh King, volume growth was 1%.
4

Emami
Kesh King: Revenues of INR 520m. Up-stocking by earlier distributors (higher
inventory in trade) has impacted performance. Except UP, Maharashtra and
Ahmedabad rest of the markets have exhausted the inventory. Should take
another 2 months for this to normalize. Given the high inventory in market, it
has also impacted the pricing discipline (distributors selling at lower price to the
trade vs. Emami)
Kesh King: Gross margins 76%, EBITDA margins 45%
Early and erratic monsoons and sluggish consumer environment impacted the
sales of summer brands.
Cooling Oil – Flat growth. 560bps market share gain to 73.2%.
Balms – 3% growth – due to monsoon deficit in Western markets (major
contributor).
Healthcare – revenues up 45% to INR 530m. Pancharisht doubled in 2QFY16
(INR 330mn vs. INR 160mn). Test marketing some products in South – Diabetes,
Heart Care, and Digestion.
Healthcare segment will see 30-35% revenue CAGR over next three years.
Market share maintained in Cooling Talc despite 20% YoY decline.
Deodorant: Has not worked but see potential in brand “HE” to be exploited for
other male grooming categories.
Gross margins: ~300bps expansion for FY16. Kesh King will contribute 80-100bps
out of this.
Price hikes: 3-4% on 12 months annualized basis.
Gross debt: INR 9.5b, Net debt: INR 8b.
Other income: Run rate of ~INR 150m, largely export incentives.
Tax rate guidance: 19% for 2HFY16, 15% for FY16, 20% for FY17.
Mentha prices: Have corrected again back to earlier levels.
Valuation and view
The runway for growth in the medium term looks attractive as it scales up new
products, Healthcare portfolio being a case in point. Management in the
conference-call expressed confidence in achieving 16% topline CAGR even in
deflationary environment. This coupled with benign raw material price
environment gives ample headroom for margin expansion despite higher ad
spends. Market share gains in key power brands underscore Emami’s ability to
manage competitive intensity even in periods of soft commodity price
environment.
Though 2Q16 organic revenue performance was impacted by seasonality, we
continue to like Emami given its strong medium term earnings visibility post the
Kesh King acquisition (45% EBITDA margin business turning EPS accretive in 2nd
year). Emami’s track record of driving synergies from Zandu acquisition gives us
conviction on the potential upside from Kesh King over next 3-4 years. Scale up
of Health Care business is also on track with strong growth delivery. It remains
amongst our top ideas given the strong earnings visibility and potential to
address larger size of prize. Stock trades at 39.6x and 31.2x FY16 and FY17E EPS,
Maintain BUY rating with target price of 1350 (37x Sep’17 EPS).
29 October 2015
5

Emami
Exhibit 9: Revised estimates downwards by 2%
New
Sales
EBITDA
PAT
FY16E
27,196
7,502
6,021
FY17E
33,036
9,229
7,641
FY16E
28,634
7,753.8
6,031
Old
FY17E
34,597
9,690.8
7,841
Change
FY16E
FY17E
-5.0%
-4.5%
-3.2%
-4.8%
-0.2%
-2.6%
Source: Company, MOSL
Exhibit 10: Emami P/E (x)
55.0
45.0
35.0
25.0
15.0
5.0
21.9
8.3
PE (x)
Peak(x)
Avg(x)
44.8
35.0
Min(x)
Exhibit 11: Emami P/E premium vs. Sensex
200
150
100
50
0
-50
33.6
Emami PE Relative to Sensex PE (%)
LPA (%)
116.7
Source: Company, MOSL
Source: Company, MOSL
Exhibit 1: Valuation Matrix of coverage universe
Company
Consumer
Asian Paints
Britannia
Colgate
Dabur*
Emami*
Godrej Consumer
GSK Consumer
Hind. Unilever
ITC
Jyothy Labs
Marico*
Nestle
Pidilite Inds.
Radico Khaitan
United Spirits
Retail
Jubilant Foodworks
Shopper's Stop
Titan Company
Reco
Price
(INR)
830
3,186
974
273
1,050
1,295
5,997
802
350
311
393
6,282
569
103
3,146
1,484
391
350
P/E (x)
Mkt Cap EPS Growth YoY (%)
(USD M) FY15 FY16E FY17E FY15 FY16E FY17E
12,200
5,833
4,061
7,338
3,652
6,752
3,866
26,582
42,972
863
3,881
9,284
4,471
208
7,009
1,488
492
4,769
15.8 22.4
45.1 49.8
13.9
9.5
15.7 18.1
20.7 24.0
22.0 27.1
-13.5 21.0
6.4
7.9
8.5
13.9
48.7 18.7
18.1 20.8
6.8 -20.8
9.3
23.8
-10.4 13.2
Loss -152.6
-6.2
7.9
11.1
30.0
40.2
-4.4
18.7 55.9 45.7
20.3 66.5 44.4
14.7 47.4 43.3
15.8 44.9 38.0
26.9 49.1 39.6
23.8 48.5 38.2
16.1 43.2 35.7
8.8
45.8 42.5
10.2 29.2 25.6
-5.2 44.3 37.3
20.7 44.2 36.5
19.2 48.2 60.9
14.9 56.2 45.4
33.9 18.0 15.9
115.5 -66.7 126.9
62.6
43.0
20.7
87.6
80.0
37.8
67.4
57.1
39.5
38.5
36.9
37.8
32.8
31.2
30.8
30.8
39.0
23.2
39.4
30.3
51.1
39.5
11.9
58.9
41.4
39.9
32.7
EV/EBITDA (x)
FY15 FY16E FY17E
38.0
48.2
31.6
36.1
43.0
34.8
29.5
32.8
19.6
37.4
29.5
28.8
37.0
12.4
64.5
37.6
17.8
26.9
31.1
30.4
27.5
30.3
32.5
29.1
25.7
29.5
17.3
30.3
23.7
35.3
27.3
10.5
55.1
29.4
15.6
28.4
25.9
24.7
24.0
25.9
26.1
24.0
21.6
26.8
15.6
25.6
19.4
30.5
23.7
8.7
34.4
19.3
12.8
23.3
ROE (%) Div. (%)
FY15
32.4
56.4
81.6
35.5
44.9
21.4
29.7
108.1
33.7
16.8
36.0
48.2
23.7
8.6
-21.7
17.2
5.3
26.6
FY15
0.9
0.5
1.3
0.8
0.7
0.6
0.8
1.9
1.8
1.3
0.6
1.0
0.0
0.8
0.0
0.2
0.2
0.8
Neutral
Buy
Neutral
Neutral
Buy
Neutral
Neutral
Neutral
Neutral
Buy
Neutral
Neutral
Neutral
Buy
Buy
Buy
Neutral
Neutral
Note: For Nestle FY15 means CY14
Source: Company, MOSL
29 October 2015
6

Emami
Story in charts
Exhibit 12: Revenue CAGR of 22.1% over FY15-FY17E
Revenue (INR b)
36.7
30.5
22.1
21.8
16.6 16.9
18.2
7.5
10.2
12.5
14.5
17.0
7.2
22.2
27.2
33.0
MENAP
39%
22.7
21.5
Revenue growth (%)
Others
CISEE 7%
9%
SAARC
&SEA
45%
Exhibit 13: Geographical breakup of IMD sales (2QFY16)
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
Exhibit 14: PAT to grow at 25.4% CAGR over FY15-17E
PAT (INR m)
95.7
PAT Growth (%)
Exhibit 15: Return ratios
RoE (%)
RoCE (%)
27.2
-1.0
0.9
1.8
2.3
13.2
2.6
21.6
3.1
27.9
20.7
4.9
24.0
6.0
26.9
4.0
7.6
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E
Source: Company, MOSL
Source: Company, MOSL
29 October 2015
7

Emami
Financials and valuations
Income Statement
Y/E March
Net Sales
Change (%)
COGS
Gross Profit
Gross Margin (%)
Operating expenses
EBITDA
Change (%)
Margin (%)
Depreciation
Int. and Fin. Charges
Financial Other Income
Profit before Taxes
Change (%)
Margin (%)
Tax
Tax Rate (%)
Adjusted PAT
Change (%)
Margin (%)
Amortization
Non-rec. (Exp)/Income
Reported PAT
2010
10,217
36.7
3,805
6,412
62.8
3,960
2,452
92.3
24.0
154
210
83
2,171
105.0
21.2
342
16.2
1,798
95.7
17.6
121
1,697
2011
12,471
22.1
5,232
7,239
58.0
4,587
2,652
8.2
21.3
140
152
331
2,691
24.0
21.6
337
15.0
2,287
27.2
18.3
0.0
0
2,287
2012
14,535
16.6
6,264
8,271
56.9
5,483
2,788
5.1
19.2
188
152
541
2,989
11.1
20.6
393
13.4
2,588
13.2
17.8
0.0
0
2,588
2013
16,991
16.9
7,154
9,837
57.9
6,421
3,415
22.5
20.1
220
66
557
3,687
23.3
21.7
548
14.6
3,147
21.6
18.5
0.0
0
3,147
2014
18,208
7.2
6,803
11,405
62.6
6,961
4,444
30.1
24.4
352
54
622
4,660
26.4
25.6
636
11.7
4,025
27.9
22.1
0.0
89
4,025
2015
22,172
21.8
7,800
14,373
64.8
9,018
5,355
20.5
24.2
343
51
964
5,924
27.1
26.7
994
18.1
4,856
20.7
21.9
0.0
0
4,856
2016E
27,196
22.7
8,501
18,695
68.7
11,193
7,502
40.1
27.6
444
587
598
7,070
19.3
26.0
1,049
14.8
6,021
24.0
22.1
2,000
0
4,021
(INR Million)
2017E
33,036
21.5
10,532
22,504
68.1
13,275
9,229
23.0
27.9
487
487
727
8,982
27.0
27.2
1,341
14.9
7,641
26.9
23.1
2,500
0
5,141
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Minority Interest
Loans
Deferred Liability
Capital Employed
Goodwill on consolidation
Gross Block
Less: Accum. Depn.
Net Fixed Assets
Capital WIP
Investments
Curr. Assets, L&A
Inventory
Account Receivables
Cash and cash equivalents
Others
Curr. Liab. and Prov.
Account Payables
Other Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOSL Estimates
2010
151
6,103
6,254
0
2,591
70
8,914
0
7,638
2,027
5,611
62
616
4,247
826
755
1,614
1,051
1,621
890
37
695
2,625
8,914
2011
151
6,747
6,899
1
2,294
137
9,330
8
7,993
3,148
4,845
65
66
5,998
1,234
1,087
2,107
1,570
1,649
883
32
733
4,349
9,332
2012
151
6,915
7,066
1
1,611
145
8,824
42
8,377
4,342
4,035
768
803
6,125
1,122
1,005
2,760
1,237
2,949
1,071
256
1,621
3,176
8,825
2013
151
7,623
7,775
0
1,201
137
9,113
46
9,394
5,472
3,922
475
1,631
6,088
1,140
1,122
2,817
1,009
3,049
1,061
267
1,721
3,039
9,113
2014
227
9,094
9,321
0
450
48
9,819
0
10,341
6,382
3,959
119
2,958
5,987
1,411
793
2,700
1,083
3,203
1,480
341
1,383
2,783
9,819
2015
227
12,079
12,306
46
470
120
12,942
41
6,393
1,882
4,511
265
5,013
6,934
1,267
1,027
3,541
1,100
3,821
1,990
468
1,363
3,113
12,942
2016E
227
15,431
15,658
46
9,470
120
25,293
15,040
7,393
2,326
5,068
500
166
10,162
2,395
1,668
3,900
2,199
5,643
2,095
468
3,079
4,520
25,294
2017E
227
19,466
19,693
46
5,470
120
25,328
15,040
8,393
2,812
5,581
500
166
10,680
2,926
2,028
2,640
3,087
6,639
2,398
468
3,772
4,041
25,328
29 October 2015
8

Emami
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout %
Valuation (x)
P/E
Cash P/E
EV/Sales
EV/EBITDA
P/BV
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
Working Capital Ratios
Debtor (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
2010
11.9
12.9
41.3
3.0
25.3
88.3
81.4
15.6
64.9
25.4
0.3
38.8
27.9
27
1.2
0.2
2011
15.1
16.0
45.6
3.5
23.2
69.4
65.4
12.7
59.9
23.0
0.3
34.8
27.5
31
1.4
0.0
2012
17.1
18.3
46.7
8.0
46.8
61.4
57.2
10.8
56.3
22.5
0.8
37.1
28.6
25
1.5
-0.2
2013
20.8
22.3
51.4
8.0
38.5
50.5
47.2
9.2
45.5
20.4
0.8
42.4
35.6
24
1.7
-0.6
2014
17.7
19.3
41.1
7.0
39.5
59.2
54.4
12.8
52.4
25.6
0.7
47.1
43.2
16
1.6
-0.8
2015
21.4
22.9
54.2
7.3
32.7
49.1
45.8
10.4
43.0
19.4
0.7
44.9
44.0
18
1.4
-0.3
663
2016E
26.5
28.5
69.0
10.8
40.6
39.6
36.9
9.0
32.5
15.2
1.0
43.1
36.9
22
1.3
0.3
2017E
33.7
35.8
86.8
13.2
39.2
31.2
29.3
7.3
26.1
12.1
1.3
43.2
34.5
22
1.3
0.1
Cash Flow Statement
Y/E March
OP/(loss) before Tax
Int./Div. Received
Interest Paid
Direct Taxes Paid
(Incr)/Decr in WC
CF from Operations
(Incr)/Decr in FA
(Pur)/Sale of Investments
CF from Invest.
(Incr)/Decr in Debt
Dividend Paid
Others
CF from Fin. Activity
Incr/Decr of Cash
Add: Opening Balance
Closing Balance
E: MOSL Estimates
2010
2,452
342
-547
-352
-532
1,362
-266
-223
-489
-1,892
-531
-78
599
1,473
141
1,614
2011
2,652
5
-152
-404
-1,215
886
-358
550
192
-297
-618
329
-585
493
1,614
2,107
2012
2,788
5
-152
-401
1,830
4,070
-1,088
-737
-1,825
-682
-1,405
495
-1,592
653
2,107
2,760
2013
3,415
5
-66
-540
187
3,002
-723
-828
-1,551
-410
-1,416
433
-1,394
57
2,760
2,817
2014
4,444
177
-54
-547
139
4,159
-591
-1,327
-1,918
-751
-1,743
136
-2,358
-117
2,817
2,700
2015
5,355
1,012
-51
-1,070
512
5,758
3,802
-2,054
1,748
19
-1,727
-4,956
-6,664
842
2,700
3,541
(INR Million)
2016E
7,502
0
-587
-1,049
-648
5,218
-1,235
-10,758
-11,994
9,000
-2,942
1,077
7,135
359
3,541
3,900
2017E
9,229
0
-487
-1,341
-282
7,119
-1,000
0
-1,000
-4,000
-3,606
227
-7,379
-1,260
3,900
2,640
29 October 2015
9

Emami
Corporate profile: Emami
Company description
Emami Limited is the flagship company of the
~INR60b Emami Group. The two promoters, Mr RS
Agarwal and Mr RS Goenka laid the foundations of
the company in 1974 as a partnership firm, Kemco
Chemicals. In 1978, they acquired Himani Limited,
a cosmetics company based in eastern India, with a
factory in Kolkata. Himani launched BoroPlus in
1982 and the Navratna cooling oil range in 1989. In
1998, the promoters merged the two entities,
creating Emami. The company has since focused on
expanding its portfolio in the Healthcare and
Personal Care space. In 2008, it acquired Zandu,
giving it a leadership position in the Balm category
and access to a host of Ayurvedic and OTC
products.
Exhibit 16: Sensex rebased
Exhibit 17: Shareholding pattern (%)
Jun-15
Promoter
DII
FII
Others
72.7
1.3
16.3
9.6
Mar-15
72.7
1.3
16.7
9.3
Jun-14
72.7
1.3
16.8
9.2
Exhibit 18: Top holders
Holder Name
Smallcap World Fund Inc
Avees Trading & Finance Pvt Ltd
Matthews India Fund
% Holding
3.4
2.7
1.5
Note: FII Includes depository receipts
Exhibit 19: Top management
Name
R S Agarwal
Sushil Kumar Goenka
Designation
Chairman
Managing Director & CEO
Exhibit 20: Directors
Name
R S Agarwal
Sushil Kumar Goenka
Aditya Vardhan Agarwal
M D Mallya*
K N Memani*
S B Ganguly*
Y P Trivedi*
Amit Kiran Deb*
Name
Sajjan Bhajanka*
Pradip Kumar Khaitan*
Vaidya Suresh Chaturvedi*
R S Goenka
Mohan Goenka
Priti Sureka
Prashant Goenka
Harsh Vardhan Agarwal
*Independent
Exhibit 21: Auditors
Name
S K Agarwal & Co
V K Jain & Co
Type
Statutory
Cost Auditor
Exhibit 22: MOSL forecast v/s consensus
EPS
(INR)
FY16
FY17
MOSL
forecast
18.6
24.1
Consensus
forecast
23.9
30.1
Variation
(%)
-22.2
-20.0
29 October 2015
10

CONSUMER GALLERY
COMPANIES
COMPANIES
SECTOR UPDATES

Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company(ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its
affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or
Emami
inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to
you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment
objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek
professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for
future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some
companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are
seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors
on investments in such business. The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and
interpreting information. Our research professionals are paid on the profitability of MOSt which may include earnings from investment banking and other business.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt
generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates
may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment
decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest.
MOSt and its affiliated company(ies), their directors and employees and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or derivatives thereof of companies
mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an
advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing
whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the affiliates of MOSt even though there might exist an inherent
conflict of interest in some of the stocks mentioned in the research report
Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match
with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research separated by Chinese walls catering to different set of customers having various objectives,
risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from, any
and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt 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 information contained herein is based on publicly available data or other sources
believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription
service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the document. While we
would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that may prevent MOSt
and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the information contained in
this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of
merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for
any necessary explanation of its contents.
Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation for
products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this
report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
There are no material disciplinary action that been taken by any regulatory authority impacting equity research analysis activities
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. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive
compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues
Analyst Certification
Disclosure of Interest Statement
Analyst ownership of the stock
Served as an officer, director or employee
EMAMI
No
No
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes
Regional Disclosures (outside India)
For U.S.
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which
would subject MOSt & its group companies to registration or licensing requirements within such jurisdictions.
Motilal Oswal Securities Limited (MOSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the United States. In addition MOSL is not a
registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the
absence of specific exemption under the Acts, any brokerage and investment services provided by MOSL, including the products and services described herein are not available to or intended for U.S. persons.
This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This
document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document relates is only available to major institutional investors and will be
engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by
the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal
Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer, MOSIPL, and therefore,
may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research analyst account.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC)
pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with
Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Kong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any
investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.”
Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not located in
Hong Kong & are not conducting Research Analysis in Hong Kong.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the
Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Kadambari Balachandran
Email : kadambari.balachandran@motilaloswal.com
Contact : (+65) 68189233 / 65249115
Office Address : 21 (Suite 31),16 Collyer Quay,Singapore 04931
29 October 2015
Motilal Oswal Securities Ltd
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
12