Foreign investment in Eveready Industries jumps to 21%

Success in LED bulbs, portable chargers and diversification into the kitchen and home appliances businesses led to increased investments, say sources

Eveready Industries' managing director Amritanshu Khaitan's stride to keep up with the changing times by diversifying its product portfolio has paid off, not just in terms of earnings, but in attracting more foreign investment as well.

Against the previous 7.47% of foreign institutional investment (FII) and foreign portfolio investors (FPI) in its shareholding pattern in December 2014, the same has risen nearly three-fold to touch 20.80% in December 2015.

The most recent impetus came in last November from Amansa Holdings, which has picked up a 4.46% stake in the company under the FII portfolio.

Amundi Funds Equity India had picked up a 1.5% stake last year as well with Nomura India Investment Fund acquiring 1.65% stake.

The other majors — Goldman Sachs India Fund — has doubled its stake from 2.17% in December 2014 to 4.9% in the same month last year, while the 1.2% holding of Nomura Trust & Banking Company remained flat.

Citigroup Global Markets Mauritius, however, has been decreasing its stake marginally. While it owned 2.6% shares in December 2014, it trimmed it down to 2.3% in the corresponding month of 2015.

Until October last year, FIIs and FPIs together accounted for 16.89% of investment, which has now increased to 20.86%.

Market sources have attributed this success to its venture in LED bulbs, portable chargers and diversification into the kitchen and home appliances vertical.

More such foreign investment is likely to seep-in in the days ahead on account of the company's foray into the LED business which is expected to grow by 164% CAGR during 2015-2018.

The battery-maker with Rs 2,253.67 crore market capitalisation has also prepared itself to absorb these funds by obtaining permission for 49% foreign investment in its portfolio.

“Eveready's EBITDA has increased by 340 basis points from 2013-14 to 2014-15 and improvements in its margins is expected this year. I think, its revenue will grow by 14% CAGR during 2015-18 and the net profit over the same period will be 31 % CAGR”, Niket Shah, vice-president of institutional equities at Motilal Oswal Financial Services said.

Further, if the anti-dumping battery law comes into effect, it would widen the company's scope in sales primarily due to its high brand recall value.

Its net profit during April-September this fiscal year stood at Rs 29.70 crore as against Rs. 28.25 crore in similar time frame of 2014, while net income showed an improvement by 6.43% at Rs. 753.51 crore.

On the BSE, shares of the company from December 14 last year till now has shown a positive trend touching a high of Rs. 312.65 on January 6, post which it has been trading between Rs. 306-308 a share.