MOSL: EMAMI (Buy): Annual Report Update - Transforming itself for the better; Credible long-term play
EMAMI (Annual Report Update): Transforming itself for the better; Credible long-term play, available at reasonable valuations
(HMN IN, Mkt Cap USD3.5b, CMP INR525, TP INR690, 31% Upside, Buy)
Key takeaways from Emami’s (HMN) FY18 annual report:
- HMN is transforming itself to stay ahead of industry with a continuing high focus on innovation and advertisements. Increased emphasis on data analytics – an area where it had lagged peers previously – is a welcome move. ‘Naya Emami’ seems to be the rallying cry.
- The company continues being aggressive on rural expansion. HMN has doubled its reach to villages with population less than 5000 people to ~25,000 in just one year. This enhances the growth prospects of its largely underpenetrated category portfolio where it has dominant brands. New launches (nine in FY18) and sustained high adspend (up 80bp YoY over already high levels) also boost HMN’s growth prospects.
- Direct reach expansion (0.21m outlets added in about two years; 0.13m in FY18 alone) is reducing the dependence on wholesale trade. This augurs well from a longer-term perspective, as wholesale trade is at times uncertain and susceptible to disruptive events.
Emami markets personal and health care products. Co.'s brands and products include: Boroplus - antiseptic cream; Navratna - cool oil; Zandu Balm for relief from headaches, backache and cold; Fair and Handsome - cream for men; Mento plus balm for relief of headaches; Fast Relief - pain relief ointment; Zandu Sona Chandi - for immunity; Kesari Jivan - health supplement; Vasocare - herbal skin jelly; Zandu healthcare offers products from healthcare to lifestyle; 7 Oils in One - damage control hair oil and HE - deodorants. Co.'s subsidiaries are engaged in personal and healthcare, newsprint, ball pen tips manufacturing, retail, pharmacy, art, edible oils, healthcare, cement and bio diesel.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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