Last Updated: Wednesday, January 25, 2017

EMMBI INDUSTRIES ~ Potential Multibagger Stock

EMMBI INDUSTRIES:  A Potential Multibagger Stock

STOCK: EMMBI ~NSE, Sector: Packaging, Stock Price on 25 Jan, 2017: 139.50 INR, Target Price: 200 INR, Time Horizon: 6 months, Growth Potential: Multibagger
Emmbi Industries is in the Packaging sector. It has rewarded its shareholders over past decade. Market experts say it has a potentiality to be a multibagger stock.

Emmbi Industries Limited (formerly Emmbi Polyarns Ltd.) is one of the most recognized brands in the field of woven polyethylene and polypropylene product manufacturing. Emmbi deals with manufacturing and selling FIBC (Flexible Intermediate Bulk Containers) and woven sacks and various woven polymer-based products such as container liners, protective irrigation system, canal liners, flexitanks, car covers etc. The company is exported by First - generations entrepreneur Makrand Appalwar and Mrs. Rinku Appalwar and was founded in November 1994. Since then, emmbi has grown from strength to strength and has become a leading player in the field of woven polymer products. 

What is meant by 'EMMBI'?


The name 'Emmbi' comes from the initials M and B from the name of our founder, Mr. M B Appalwar. It is our permanent sign of respect for the role of our elders in our success today. After all, if it were not for their support, emmbi would have remained a mere glimmer in our founding eye. Emmbi has won numerous awards and distinctions, along with a collection of prestigious customers all over the world. The company has its production facility in Silvassa in Gujarat.

Starting with only one small polymer extrusion plant, today Emmbi Industries has become one of India's largest specialty polymer processing companies. On a journey of two decades, the company has transformed from a small operation with fewer than 10 members to a company that counts more than 180 customers in some fifty countries around the world.

For more info check, http://www.wovensackindia.com/

Key Numbers; 


  • MARKET CAP (RS CR) : 247.31
  • P/E: 19.77
  • BOOK VALUE (RS): 41.24
  • DIV (%) : 5.00%
  • INDUSTRY P/E: 37.27
  • EPS (TTM) : 7.07
  • PRICE/BOOK: 3.39
  • DIV YIELD.(%) : 0.36%
  • FACE VALUE (RS) : 10.00 
Source: moneycontrol retrieved on 25th Jan, 2017.(1)

POSITIVES
1. Emmbi Industries has a record of consistent revenue growth over a decade. Last five year's revenues are ; FY12: INR 102.35 Cr., FY13: INR 140.22 Cr. FY14 : INR 159.11 Cr. FY15 INR 184.38 Cr. and FY16 INR 209.24 Cr. (2)

2. The company has a fully equipped manufacturing facility that is spread over 200,000 square feet on a 7-acre campus. The location is in the territory of the union of Dadra and Nagar Haveli which is at a distance close to some of the ports.

3. Visible profit growth over a decade: See the splendid track record of multibagger stock Emmbi Industries in term of Profit/Loss Before Tax; FY12: INR 5.02 Cr. FY13 : INR 4.82 Cr. FY14 : INR 6.22 Cr. FY15 : INR 8.27 Cr. FY16 : INR 14.28 Cr.(2)

4. The company is equipped with advanced machines for extrusion, weaving, webbing, coating development, coating, printing, packaging and coding.



INTERESTING INFORMATION

1. Last year, Emmbi's exports exceeded one billion rupees, or 100 crores. They expect to maintain double-digit export growth over the next three years.

2. With a history of adding new products and customers, the company has ceded to the water conservation company, which works well.
3. At the time of the IPO in 2010, the company obtained capital to invest in a 17,800 MT production facility with a 200-crore income intent. Today, the company has a capacity of 18,200 tons, with potential to reduce turnover to 300 crores.

4. Emmbi produces approximately 600,000 FIBC per month. They have both standard and specialty.


5. Emmbi Industries' revenues in fourth quarter of FY17 grew 14 percent to Rs 56.3 crore versus Rs 49.4 crore in the prior year period, while net profit gone up to 27.6 % to Rs 3.7 crore. For FY16, revenue stood at Rs 208 crore, up 13 percent from Rs 184 crore in FY15, while net profit rose 76.7 percent to Rs 10.6 crore in FY16.


6. According to Makrand Appalwar, CMD; "Emmbi Industries expects earnings per share (EPS) to be above 8 in Fy 2017-18. The company has now risen to focusing more on business to consumer (B2C) sales."(3)

7. The company is also changing track, moving away from packaging to advanced composites, agriculture products and water management.(4)

8. Increase in crude oil prices doesn't affect the margins of the company. It's profitability isn't related to crude oil prices. So, this is going to have an impact on its profitability in FY18.(5)


9. Shares of Emmbi Industry is trading below 20 P/E while industry P/E is approximately 40, which make it priced attractively. 

10. The company is committed to maintain a higher EPS in years to come which will bring its P/E low below 20 resulted in higher demand of the stock.

NEGATIVES - POSSIBLE RISKS

1. Over all market volatility and bearish sentiment driven by uncertainty in China and global slowdown.

Our Take
Emmbi Industries is a high quality company with laudable founders with an excellent record. It is an innovative company with a wide range of products catering to various sectors in different countries. As they understand the market pulse and the needs of their customers, management has proven to come up with new products from time to time.

With the improvement of the product range and customer base, management has also reduced the debts gradually. Reading their latest annual reports, customer brochure, it is clear that the company has good plans for the future, and an ability to perform them successfully. At present, the company operates at 70% capacity. Increasing capacity will improve profit margins, and thus net profits.

At a market cap of 250 crores, this company with great future prospects, is available at low prices.

As per market experts 'Emmbi Industries' is an excellent share having multibagger potentiality !!!

Experts views;

KR Choksey : Jan 10, 2017: Buy Emmbi Industries; target of Rs 176.





Over to you
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