Buy EPL; target of Rs 250: Motilal Oswal

Motilal Oswal's research report on EPL

EPLL hosted the investing community, followed by a plant visit to its Vapi facility to showcase the technology, innovation, and processes used to improve its manufacturing efficiencies. The team was represented by Mr. Deepak Goyal (CFO), Mr. Srihari K Rao (President - AMESA), Mr. Harikaran (Creativity & Innovation –CNI), Mr. Santosh Ullal (Manufacturing Head – AMESA) and Mr. Alok Sharma (IR and Corporate Finance). At the Vapi plant, EPLL manufactures caps, tubes, and carries out lamination printing. The key takeaways from the visit are as follows: Management demonstrated EPLL’s manufacturing efficiencies that are driven by the implementation of automation across machinery. Automation has been the key focus area across processes for the company. The company highlighted its CNI capabilities through which it aims to explore incremental business from the Beauty and Cosmetics (BNC) market across existing geographies, with a major focus on the EU – the largest market. CNI is focused on innovation and sustainability in developing new tubes. EPLL aims to drive growth through its BNC segment and the Brazilian market, with margins improving gradually. The EU, the largest BNC market (13.8b tubes – 49% global share), prioritizes aesthetics and sustainability over pricing, thereby challenging low-cost conversion efforts. The company’s premium offerings by the CNI team target this market.

Outlook

We expect a revenue/EBITDA/adjusted PAT CAGR of 10%/17%/31% over FY24- 26. We value the stock at 18x FY26E EPS to arrive at our TP of INR250. Reiterate BUY.