Emmbi Industries : Buy at CMP of 21-23 for long term target of 40

Emmbi industries is in manufacturing and  sale of FIBC (Jumbo Bags) and Woven Sacks and various woven polymer based products like Container Liners, Protective irrigation system, Canal Liners, Flexi Tanks, Car covers etc. In addition to FIBC company manufactures various woven polypropylene products including Small bags, Box woven bags, Roofing  underlayment fabric, Courier bags, Ground covers, Silt fence and Geotextiles & offer woven bags and fabrics in both PP and HDPE.  Their products are UV stabilized and pre-conditioned against shrinkage.

 The Company is involved in producing various types of Specialty Bulk Packaging material for the Indian Market. In Domestic market, remains one of the most active players for the packaging needs of the E-Commerce Companies, FMCG Products such as Detergent Powder, Branded Salt and Branded Wheat flour etc

Major customers are from cement, fertilizer, tea, sugar, seeds, food grains–Raw material etc.

More than 50% of revenue comes from export and has presence in 45 countries

 Company is promoted by the first-generation entrepreneurs, Mr. Makrand Appalwar and Mrs. Rinku Appal war in  November 1994. 

Company has manufacturing facility in Silvaasa.

Financials : Company has been performing very well since last 4 years and almost  trebled  the turnover in last 4 years which is remarkable and top line growth has come along with increase in profits. In 2014 company achieved turnover of 159crores with NP of 4.33 crores resulting in EPS of 2.45.This FY year2014-15  in last 9 months company has already achieved turnover of 134 crores and end year it could achieve turnover of approx. 185 crores with NP of 5 crores resulting in EPS of approx 3.

Positives:

1.       Demand is set to rise for company products due to growth in cement, fertilizer industries

2.       Company has been performing well with decent growth in last 4 years which are recessionary

3.       Margins are set to improve due to lower cost of raw material which is crude by product.

4.       Company growth rate is +20% in last 4 years .

5.       Dividend paying company though % is low due to debt.

6.       Book value of approx 32.

Stock is available at PE of 7-8 in next one year it can easily deliver EPS OF 4 with PE multiple of 10 it can achieve target price of 40 technically and fundamentally it is right in the investment zone.

Long term investor can buy at CMP of 21-22