IFF Expands Capacity in India

New York-based International Flavors & Fragrances Inc. ( IFF - Analyst Report ) , a leading creator and manufacturer of flavors and fragrances meant for consumer products, recently confirmed the opening of a new unit in Delhi, India, to strengthen its flavors business in Indian market.

International Flavors & Fragrances will primarily utilize the new entity for serving other companies mainly engaged in the production of foods, sweets, beverages and dairy goods in the Indian market. The new facility will accommodate the flavors business’ creative, technical, sensory and marketing divisions.

The company’s expansion plans comprising opening of new facilities and augmenting existing operations, particularly in the emerging markets, are expected to boost its long-term potential.Moreover, this move is seen as a positive aspect for the company's flavors business, which will further enhance the segment's performance going forward.

Earlier, International Flavors & Fragrances’ revenue from the Flavors business in the first quarter of fiscal 2012 increased 5.0% year over year, on a constant currency basis, to $349.9 million. The revenue from Greater Asia was flat year over year or up 1% on a constant currency basis.

Additionally, we believe International Flavors & Fragrances stands in a favorable position to benefit from new business wins, tremendous geographical diversification and product mix. Furthermore, the company’s continuous accomplishments in research and strong consumer insight support its growth momentum.

However, it faces fierce competition from its peers such as Helen of Troy Limited ( HELE - Snapshot Report ) , Physicians Formula Holdings Inc. ( ) and Inter Parfums Inc. ( IPAR - Snapshot Report ) .

The current Zacks Consensus Estimate for the second quarter of 2012 is $1.11, reflecting a year-over-year growth of 6.04%. Estimates for the fiscal year 2012 and 2013 are $4.00 and $4.34, representing annual growth of 6.98% and 8.36%, respectively.

We currently maintain a Neutral recommendation on International Flavors & Fragrances. It carries a Zacks #3 Rank, translating into a short-term (1-3 months) Hold rating.