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.
For all recommendations report,click here
Disclaimer:The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.