Motilal Oswal's research report on EPL
EPLL reported 10% QoQ/6% YoY revenue growth in 2QFY24, aided by broadbased growth across regions. EAP/Americas registered the highest YoY growth of 13% each, while AMESA/Europe rose 5%/6% YoY. AMESA posted the highest EBIT margin expansion of 250bp YoY, while EAP’s EBIT margin remained flat. The Americas (including Brazil) witnessed a 130bp YoY margin contraction, primarily due to the ramp-up cost of Brazil plant. Europe margins also remained under pressure and contracted 120bp YoY. Factoring in higher interest costs, losses in Brazil, and a lower margin estimate in Europe, we cut our FY24E/FY25E earnings by 16%/7%. Reiterate BUY.
Outlook
Factoring in higher interest costs, losses in Brazil, and a lower margin estimate in Europe, we cut our FY24E/FY25E earnings by 16%/7%. We value the stock at 21x FY25E EPS to arrive at our TP of INR250. Reiterate BUY.
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