Non-oral care category-bigger growth opportunity
Essel Propack Ltd (EPL), part of the USD 4.2 billion Essel Group, is the largest specialty packaging company and laminated tube manufacturer in the world catering to the FMCG and Pharma space. It manufactures tubes for oral care, cosmetics, pharma, food and industrial product.
Outlook and Valuation:
Marquee clients, strong global presence, robust innovation track record and increasing presence in non-oral care segment will drive strong growth for EPL going ahead. Further, focus on strengthening capabilities both in terms of market outreach and technology introductions bodes well for the company. Consequently, we forecast consolidated revenue/PAT to grow at a CAGR of 12%/21% over FY17-20E. With increase in revenue contribution fron non-oral care segment we expect EBITDA margin to improve to 20.8% by FY20E. We initiate Essel Propack with an ACCUMULATE rating with a TP of Rs. 331 based on 16.5x FY20E EPS.
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