Wednesday, June 20, 2012

>EMAMI: Launches talc in kids' personal care segment

Carves another niche

Emami has entered into the kids' personal care market in India with the launch of 'Boroplus Kids‐Total Defense Talc', priced at INR45 for 100g, targeting consumers in the age group of 5‐12 years. Currently, this relatively niche category has no major competitors; hence, Emami plans to cash in on its Boroplus brand. In the past, Emami has successfully identified niche spaces and scaled them up (like fairness cream for men). It is currently being test marketed in Andhra Pradesh and post that will be rolled out nationally. Based on the response, Emami may expand into other kid focused categories like lotion and creams. A key challenge will be adequately sub segment in terms of product and brand positioning. Emami is already present in the highly competitive infant baby oil segment; we believe this strategy of entering a new segment would help it add new growth drivers. Maintain ‘BUY’.

Launches talc in kids' personal care segment
The entry into this category gives Emami a competitive edge over other personal care players as major baby care companies like Johnson & Johnson and Wipro are currently not present in this sub‐segment, but remain focused on baby/infant segment. Currently, the product is being test marketed in Andhra Pradesh in prime cities like Hyderabad, Vijaywada, Vizag and Nellore and is available in a single variant of 100 gm pack, priced INR45. Emami is already present in the infant care segment with its baby oil ‘Himani Sona Chandi Healthy & Fair Ayurvedic’.

Well‐positioned in various niche segments
In the past, Emami has been successful in identifying niche segments in the personal care categories as seen with the entry into fairness cream for men, cool talcum powder, cooling oil etc.

Outlook and valuations: Positive; maintain ‘BUY’
We are optimistic about this launch and remain positive on Emami. At CMP, the stock is trading at 24.3x and 19.8x FY13E and FY14E, respectively. We reiterate ‘BUY’ on the stock and recommend ‘Sector Performer’ rating on a relative return basis.