Hold Essel Propack; target of Rs 136: ICICI Direct

April 24
16:25 2019

ICICI Direct’s research report on Essel Propack

In a recent development, private equity player Blackstone has entered into an agreement with Ashok Goel Trust to purchase ~51% stake in Essel Propack (EPL) for a consideration of Rs 2157 crore (Rs 134/share). Ashok Goel Trust and its affiliates currently hold ~57% of EPL. Further, as per the takeover code, this transaction will trigger a mandatory open offer for a purchase of additional 26% shares of the company. The open offer price has been fixed at ~Rs 139/share. Based on the open offer subscription, the purchase price consideration will vary between Rs 2,157 crore and Rs 3,211 crore (~US$ 310-US$ 462 million). Ashok Goel, Chairman & Managing Director, will retain a minority stake (6%) in EPL.


We believe a demand recovery in the Amesa and Europe region will be a key trigger for future growth. With a target market cap, the deal is valued at 20xFY20E, 17xFY21E earnings and 8xFY20E, 7xFY21E EBITDA, respectively. We believe the stock would hover around the deal price.

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