MID CAP PICK FOR LONG TERM - EMAMI LTD

It is mid cap  company listed  on BSE  and NSE and the company  is engaged in the  production and marketing business of  personal care products. The product profile includes cosmetics, ayurvedic products, and other personal care items. The prominent brands are Navaratna Oil, and the men’s fairness cream.

The Calcutta based company is exploring for acquisitions in the healthcare space to expand the foot prints of its hospitals business in the country. At  present the Emami and Sharachi group in collaboration with West Bengal government is running AMRI hospital and investing substantial amount of `400 crore to increase the number of beds to 1500 from 900 during 2011-12. The future plans for expanding the hospital business other than eastern India is being explored on acquisitions.

It has merged Zandu Pharma and FMCG business in 2009.

The market capitalisation of the company is `7707.06 crores with PE ratio around 34 (as on 19-Jul, with stock price around ` 509.

It is one of the  companies which is a good  long term bet for investment. The financials for the last 4 years are as given below:

Figures in rs crores	FY 2011	FY2010	FY2009	FY2008
Income	1239.69	1013.56	729.71	586.37
Net Profit	227.49	165.40	87.52	92.75
Reserves & Surplus	667.89	605.65	282.90	276.57
Debt	N.A	253.25	440.08	35.19
Share Capital	15.13	15.13	12.43	12.43

The EPS of the company is Rs. 15.04 and Rs.10.93 as on 31.03.2011 and 31.03.2010.

You may observe sudden increase in debt from `35.19 crores in FY2008 to ` 440.08 crores in FY 2009 due to expansion of manufacturing facilities for acquiring land, bldg , plant and machinery  and other assets by obtaining secured loans from financial institutions. This has also resulted in less profit in FY 2009, but subsequently, the growth continued satisfactorily.

In June 2011, HDFC, DSP Black Rock, Franklin and   Kotak mutual funds have acquired the shares of the company under their different schemes. Hence mutual funds have also significant holding in their portfolios showing strong confidence in the growth of the company.