Emmbi Industries Ltd Q1 FY23 Result Updates. Weak performance in domestic market hampered revenue.

Emmbi Industries Ltd Q1 FY23 Result Updates.
Weak performance in domestic market hampered revenue.

Emmbi Industries Ltd reported a net profit of Rs. 3 crores, declined by 32.3% YoY from Rs. 4.5 crores and 34% QoQ from Rs. 4.6 crores. Net profit margin contracted by 143 bps YoY and 134 bps QoQ to 2.9%.
In Q1FY23, Emmbi’s revenue grew 1.6% YoY to Rs. 105.8 crores from Rs. 104.2 crores. Though on QoQ basis revenues declined by 3.0% from Rs. 109.1 crores.
Earnings before interest, tax, depreciation, and amortization ( EBITDA) has seen a decline of 4.7% YoY from Rs. 11.1 crores and 17.3% QoQ from Rs. 12.8 crores to Rs. 10.6 crores. The fall in EBITDA was due to higher other expenses, which increased 44.1% YoY to Rs. 25.1 crores for the quarter. EBITDA margin also contracted by 66 bps YoY and 173 bps QoQ to 10
Emmbi is embarking on the path to become a zero-waste company by FY23. The company is right on track for the same and is confident to reach the ambitious target.
Muted revenue growth on account of subdued domestic market performance In Q1FY23, Emmbi’s revenue saw a muted growth of 1.6% YoY to Rs. 105.8 crores, on account of subdued performance in its domestic market. Sequentially revenues declined by 3.0% QoQ on a high base of last quarter.
Emmbi is witnessing strong traction in its export market. The company has a robust export order book. Emmbi launched the Reclaim30 range products, to cater to the UK’s new plastic packaging tax. Reclaim30 is Emmbi’s range of sustainable plastic packaging, which uses 30%+ recycled polypropylene. The product which was launched last year is now a commercial success. New trials are now successful to produce some of the Avana Retail Range of products. This will be very pathbreaking innovation for the company. The company is now working on designing products with higher content of rPP.

Higher input costs impacted margin.

The fall in EBITDA was due to higher other expenses, which increased 44.1% YoY to Rs. 25.1 crores for the quarter. Higher freight costs which were included in other expenses has jacked up the other expenses figure for the quarter. EBITDA margin also contracted by 66 bps YoY and 173 bps QoQ to 10%. Higher interest costs (+14.6% YoY) and depreciation expenses (+17.2% YoY) impacted PAT. PAT margin also suffered a contraction of 143 bps YoY/134 bps QoQ to 2.9%.

The shares of Emmbi Industries Ltd are trading at Rs. 97.70, up by 0.36%.

Valuations:

The return on equity (ROE) is 13.2% for the quarter ended June 2022. The price-to-earning (P/E) ratio stood at 9.72. The return on capital employed (ROCE) for the company is 14.2%. The price to book value of Emmbi Industries Ltd is 11.2. The EV/EBITDA is 6.45. EPS during the quarter came at Rs. 9.94. %.