Buy Essel Propack; target of Rs 341: Geojit

January 12
17:42 2018

Geojit’s research report on Essel Propack

Constant technological innovation and expansion of product range has made Essel Propack a leading global specialty packaging company with a 36% market share of the world’s oral care market in volume terms. Emerging markets would be the key growth driver for oral and non-oral care categories driven by growth in Indian business helped by recovery in the FMCG industry, improving EAP & European region performance and increased volumes from major markets in US, Germany and China. Synergies from European operations, ramp up of large long-term contracts, increased focus on non-oral care segment and new customer additions would help drive revenue CAGR of 17% over FY17-20E in Europe business. Hence, we model revenue CAGR of 12% over FY17-20E ? With company’s enhanced focus on increasing the contribution of non-oral care, we expect EBITDA margin to rise to 20.1%/20.8% for FY19E/20E.

We recommend BUY rating on the stock with a target price of Rs. 341, based on 17x FY20E EPS, an upside of 16%.

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