Broking house, ASK Raymond James & Associates has recommended buy rating on the Essel Propack with target price at Rs 98.
ASK Raymond James & Associates report on Essel Propack:
Essel Propack: Warming up to the packaging leader
"We recently met with the management of Essel Propack, to get a flavour of recent trends in the packaging business as well as the shaping up of new initiatives. We also had the opportunity to speak with a couple of large OEM medical devices firms in the US as also a few contract manufacturing companies located in California, about the strengths and challenges of the market. Our conversations give us incremental confidence in the company's ability to ramp its medical devices business and also gain traction in the plastic tubes and specialty packaging segments."
"Though there are still concerns on execution with respect to the various new initiatives (setting up of the plastic tubes plants in US and Poland, the new pharmaceutical and foods segment of specialty packaging and new segments within medical devices), we believe there is value in the stock at current levels. We are retaining our earnings estimates for CY07E and CY08E of Rs7.4 and Rs9.8 respectively. At the current market price, the shares trade at 8.1x CY08E EPS. While maintaining our target price at Rs 98 (supported by DCF analysis), we are upgrading our recommendation on the stock to a Buy from a Hold, primarily on valuation (an upside of 24%) and increased confidence in the business."
