ELDER HEALTHCARE - BUY

Elder Healthcare - Yes ,its name is bit confusing.Even if its name sounds like a pharma company ,FMCG/Personal Care is the correct sector in which it can be included.This company is part of 800 Cr Elder group which is well known in pharma sector through their another company

Elder pharmaceuticals.Company selling many products  comprises of OTC products in pain management, fairness segment , oral care, lip care ,burn categories, Men,s and Women's grooming ..etc..Many of these products are in-licensed products of reputed multinational brands .This means that the brand is not owned by the company but it is only  produced/distributed by the company. Such agreements always causing for thin margins for Elder .It is selling many international brands in India which includes - Tiger Balm, Blistex Lipcare balm,Essance Room Freshner,Fairone Fairness Cream,Neemtone Facewash,BeYu brand Cosmetics, Fuel deodorant body spray ..etc( For full product list click HERE). In recent times as a change in its business strategy, Elder Healthcare is reducing its dependency on in licensed products and starts to concentrating in building their own brands.

Dropping the sales of 'Tiger balm' and introduction of 'Octane' Brand deodorant is the best example of this changing strategy.Company is also planning many more new products its own. Effect of this strategy is clearly visible in March quarter result where company posted improved  margins for the first time in many years.In march quarter Company posted a turnover of Rs.39 Cr and a net profit of Rs.1.33 Cr where it posted just Rs.17 Cr sales and and a profit of 40 lakhs in the same period in last year.Now the management is planning to make it  a Rs.300 Cr company in two years and reduce the ratio of in licensed - own products from current level of 90:10 to 50:50.. Company having a small equity base of just 4 Cr and out of it 50 % is held by the promoters itself.In last full year Company posted a turnover of Rs.113 Cr,net profit of Rs. 1.74 Cr  and an EPS of Rs.4.35. On successful launch of own products like recently launched 'Octane' its margins will surely improve.All FMCG company's are posting healthy gains mainly due to the middle class spending story of India in recent times both in terms of turnover and share price.Elder healthcare is expected to show the same growth which shown in last quarter of the last financial year. If it happens there is good scope for sharp appreciation even from current level considering the small equity/low floating stock nature of this FMCG company.

CMP is Rs.145/-

 For latest interview of MD , Click HERE