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7.1x FY2012E
CMP : Rs133
RECO : BUY
TP : Rs160
Investment Rationale
§ Well enriched business model - with multiple drivers
§ Cosmetics and Perfumery to emerge as a strong growth driver - Expect segment revenues to grow at 12.6%
CAGR (FY10-12E) to Rs6.1 bn
§ PGL to reduce focus on pharmaceutical business - Expect revenues to decline by 3.5% CAGR to Rs3.1bn during
FY10-12E
§ Momentum in SF&B to continue - Expect 12.2% revenue CAGR during FY10-12E
§ Enrichment of sales mix - in turn improving profitability
§ Restructuring exercise to bear fruit
§ Already incurred capex - now in harvesting stage
§ Eying positive cash flow - improvement in balance sheet
Valuations
§ At CMP, the stock is trading at 14.4X FY11E and 7.1X FY12E consolidated earnings of Rs9.3 and Rs18.7 per share respectively
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