STATEMENT ANALYSIS OF

EMAMI LTD. AND ITS

VALUATION
BY GROUP 5
VIVITA RODRIGUES

19

ADITI MORARKA

24

PRAVEEN MALLABADE

29

HITESH HELIA

34

ARBEZ KHARBHARI

39

JIGAR SONI

61

DEBASHISH MISHRA

68

ABOUT EMAMI LTD.

Established in early 70s, Emami group has grown in India with presence in major
sectors of FMCG, real estate, hospitals, retail, newsprint manufacturing, pharmacy
chain, contemporary art ,edible oil and biodiesel . Founded by two friends Mr RS
Agarwal and Mr RS Goenka, Emami today, is a trusted and loved brand of the nation
with over 25,000 employees and a group turnover of about Rs 10,000 cr.
Against all odds with a vision of combining the age old wisdom of Ayurveda with
modern manufacturing techniques for creating winning brands the company started
with a merger amount of Rs. 20,000. A dream of reaching out to the Indian middle
class; a target audience whom they thought will have increasing potential for
consumption, the company started manufacturing cosmetic products as well as
Ayurveda medicines under the brand name of Emami from a small office (still
retained) in Kolkatas business district of Bada Bazar. Their consumer insight is
reflected today in the mission statement of Emami Limited:"Making people
healthy and beautiful naturally".

EMAMIS OVER THE LAST 5 YEARS

Share Capital
Equity - Authorised

Equity Paid Up

30.00

25.00
25.00

25.00

22.70

22.70

20.00

20.00

20.00

20.00

15.00

15.13

15.13

15.13

41334

40969

40603

10.00

5.00

0.00
42064

41699

EMAMIS OVER THE LAST 5 YEARS

Total Debt/Equity(x)

Shareholder's Funds

0.35
0.32
0.30
0.25

80.00%
73.41%
70.00%

71.58%

60.00%

0.22
0.20

57.17%

60.67%

58.03%

50.00%

0.15

40.00%

0.15

30.00%

0.10
0.05
0.03

0.04

0.00
42064

41699

20.00%
10.00%

Total Debt/Equity(x)

41334

40969

Linear (Total Debt/Equity(x))

40603

0.00%
42064

41699

41334

40969

40603

EMAMIS OVER THE LAST 5 YEARS

Growth Ratio
30.00
25.00
20.00
15.00
10.00
5.00
0.00

42064

41699

Net Sales Growth(%)

41334

Core EBITDA Growth(%)

40969

40603

EMAMIS OVER THE LAST 5 YEARS

Total Assets

Total Assets

1800.00
1676.32
1600.00
1400.00
1200.00
1000.00
800.00
600.00
400.00
200.00
0.00
42064

1302.29

1359.94

41699

41334
Years
Total Assets

1281.50

40969

1188.89

40603

EMAMIS OVER THE LAST 5 YEARS

Asset Turnover(x)
1.60

Current Ratio(x)
3.50

1.52
1.39

1.40

1.31
1.20

1.20

3.00
1.10

2.00

0.80

Current Ratio(x)

0.60

1.67

1.50

1.54

1.58

40969

40603

1.00

0.40

0.50

0.20
0.00

2.65

2.50

1.00
Asset Turnover(x)

2.96

42064

41699

41334

40969

40603

0.00

42064

YEARS
Asset Turnover(x)

Linear (Asset Turnover(x))

41699

41334
Years

Current Ratio(x)

Linear (Current Ratio(x))

EMAMIS OVER THE LAST 5 YEARS

Operating Profit

Profit After Tax

700.00

600.00

631.89
600.00

500.00
506.57

500.00

485.45

499.32
435.03

400.00

400.44

402.43

400.00

314.68
300.00

258.81

300.00
200.00

200.00

100.00

100.00
0.00

228.71

42064

41699
Operating Profit

41334

40969

Linear (Operating Profit)

40603

0.00

42064

41699
Profit After Tax

41334

40969

Linear (Profit After Tax)

40603

EMAMIS OVER THE LAST 5 YEARS

Working Capital/Sales(x)
30

5.55

5.43

4.95

5
4

Debtors Turnover(x)
24.8
25

20
3.52

16.3

2.98
3

15

10

0
42064

19.36

41699

41334

40969

Working Capital/Sales(x)

40603

0
42064

41699
Debtors Turnover(x)

41334

14.13

13.75

40969

40603

Linear (Debtors Turnover(x))

DUPONT'S ANALYSIS
Emami Ltd. Du Pont Analysis -Consolidated

50.00
44.89
45.00

PATM (%)

Linear (PATM (%))

Sales / Total Assets(x)

Assets to Equity (x)

ROE (%)

Linear (ROE (%))

47.08
42.41

40.00

37.07

35.00

34.74

36.61

30.00
25.00
21.51

21.71

20.00

18.15

17.51

18.07

16.35

15.00
10.00
5.00
1.38

1.56

1.78

1.77

1.75

2.20

0.00
1.52
42064

1.39
41699

1.31
41334

1.20
40969

1.10
40603

1.02
40238

FORECASTS FOR THE FUTURE YEARS

FCFF for March 2015 - 483.32 Cr.
Growth in FCFF in the previous year - 11.93%
Industry CAGR 11%
Hence we assume growth in free cash flows at the
Marsame rate
Estimate for Year

Free Cash Flow for Firm

Mar-16
540.99

Mar-17 Mar-18 Mar-19

605.53

677.78

758.65

20

849.17

COST OF CAPITAL FOR EMAMI

Average returns of Emami 23.36%
Risk free rate of return [In comparison to fixed deposit rates
for 1 year deposits] 9%
Beta for emami [sensex] 0.60
Beta for Emami [Nifty] 0.55
Cost of capital for Emami Ke = Rf + (Rm Rf)
Ke = 9 + 0.6(23.36 9)
Ke = 17.6 %

VALUATION BASED ON DISCOUNTED CASH

FLOWS
Estimate for Year
Free Cash Flow for Firm
Discounting Factor @
17.36%
Discounted FCFF @
17.36%
Cumilative Discounted
FCFF

Terminal Value as per

Gordan growth model

Valuation of Emami

Value per share

Mar-16
540.99

Mar-17
605.53

Mar-18
677.78

Mar-19
758.65

Mar-20
849.17

0.8521

0.726

0.6186

0.5271

0.4492

460.98

439.62

419.28

399.89

381.45

2101.20

18353.36417

20454.57

901.08

CONCLUSION
Emami is trading in the market at Rs. 978
We value Emami at Rs. 901.08
Hence we conclude that Emami is over valued at this
moment in the market
We suggest that investment in Emami is not
advisable at this moment as the market may correct
itself.
We also suggest already invested investors to
withdraw their investment as they can book the over
valuation profit.