Two major beauty and personal care players, L'Oréal and Estée Lauder are increasing their focus on India. While both are strengthening their Indian manufacturing facilities, Estee Lauder is also contemplating on raising its stake in Indian skincare and haircare company, Forest Essentials.
On a separate note, cosmetics giant, Revlon has been sued by one of its former chief scientific officers, on grounds of discrimination and retaliation. The charges were brought by Alan Meyers, against Revlon’s CEO Lorenzo Delpani.
Below, we give a quick rundown on the most notable events in the last week related to these companies.
See Our Complete Analysis for These Companies Here
L'Oréal
L'Oreal believes that its second India manufacturing unit at Baddi, Himachal Pradesh, will aid in strengthening its distribution network. According to Dinesh Dayal, COO, L'Oreal India, North India has one of the largest demands for beauty products, hence, the manufacturing plant is of strategic importance. The company already had a factory in Chakan, Pune and recently acquired a sub-contracting operation at Baddi.
Our price estimate of $37 for L'Oréal is around 9% above the current market price. Our full FY14 revenue estimate stands at approximately $32 billion and the diluted cash EPS estimate at $2.05. L'Oréal's stock price experienced a 3% decline over the week through Friday.
Estée Lauder
Estee Lauder has recently announced its intention to increase its stake in Forest Essentials, a premium Indian hair and skincare brand. Currently financial consultancy firm Deloitte is undertaking the due diligence for Forest Essentials, prior to the finalized deal. Estee Lauder presently owns 20% of the Forest Essentials, which it had acquired in 2008. The company is also considering India, for building its skincare and cosmetic manufacturing units.
We have a price estimate of $85 for Estée Lauder, about 12% higher than its current market price. Our full CY14 (ending December 2014) revenue estimate stands at approximately $10.8 billion, compared to a consensus FY15 (ending June 2015) estimate of $10.9 billion. Estée Lauder's stock price experienced a slight decline of around 1% over the week through Friday.
Revlon
Revlon has been sued by its former chief scientific officer, Alan Meyers, who claims to have been unjustly fired for raising safety concerns and for being Jewish. In Meyers' lawsuit (filed on December 30), he claimed that CEO Lorenzo Delpani accused Meyers of raising "ghost" safety problems and thereby slowing production, at Revlon's recently acquired laboratories. Meyers joined Revlon in 2010 and was fired in December 2014. Meyers also accused Delpani of racism, claiming that Delpani would frequently insult Meyers while making anti-Semitic and anti-American comments. The lawsuit accuses Revlon of discrimination and retaliation and seeks unspecified damages.
We have a price estimate of $ 33 for Revlon, which is at a 3% discount to the current market price. Our full FY14 revenue estimate stands at approximately $1.93 billion, in line with consensus estimate. Revlon's stock price experienced a 3% decline over the week through Friday.
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