Buy Essel Propack; target of Rs 314: Edelweiss

Edelweiss’ research report on Essel Propack

Essel Propack (EPL) reported lower-than-estimated Q4FY18 performance with revenue, at INR6.3bn, growing mere 3% YoY (net of GST); constant currency (CC) growth too came in at paltry 2% YoY (FY18: 8%). Key highlights were: 1) India continued to be impacted by the GST rate change in November17; 2) as per management, oral care concerns in EAP seem to have stabilised; 3) Americas reported strong margin uptick, driven by operating efficiencies while Europe remained weak.


As such, EPL is focusing on improving efficiencies in EDG and increasing non-oral share in Poland to drive this. We value the stock at 9.0x FY20E EV/EBITDA, yielding TP of INR314 (INR317 earlier). Maintain BUY. Delays in turn-around of Europe could make us revisit our recommendation.

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