Feb'25 View on EPL Ltd

EPL Limited (formerly known as Essel Propack Limited),is the largest specialty packaging global company, manufacturing laminated plastic tubes catering to the Beauty & Cosmetics, Pharma & Health, Food, Oral and Home. The company was acquired by the Blackstone group on Aug – 2019 from the Essel group of companies. The Blackstone Group is one of the leading investment firms in the world with an AUM of around USD 511 billion across sectors like private equity, real estate, hedge fund solutions and credit businesses. The Group also has an exposure in the packaging industry through acquisition of varied companies such as the USA based Graham Packaging, Owens-Illinois Inc, Ohio and China based packaging firm ShyaHsin. EPL reported EBIDTA/PAT below our expectation in Q3 with sales/Ebidta growth of 4%/-6.6% yoy due to lower-than-expected performance of AMESA (down ~9.5% yoy) and EAP (~down 2.9% yoy), primarily driven by the slowdown in the Indian market and currency depreciation in Egypt, respectively. The Americas and Europe grew by 30% yoy and 2.2x yoy, respectively. Strong margins in Europe and the Americas are expected to sustain, supported by cost optimization, an improving sales mix, and a robust demand scenario in Brazil, which is leading the company to fast track its capacity addition plans in the region. We broadly maintain our estimates for FY25/FY26/FY27 and value the stock at 21x FY27E EPS to arrive at our TP of Rs 300 (from Rs 310).