Buy Essel Propack; target of Rs 135: Edelweiss

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26 Aug, 2025 12:21

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Edelweiss' research report on Essel Propack

Essel Propack (EPL) reported decent Q1FY19 revenue growth of 13% YoY driven by a spurt in the Americas and EAP. However, margins are below estimate due to lower margins in EAP and Europe with a 15% lower-than-expected PAT (up 22% YoY to INR420mn). Key highlights: 1) India performance was impacted by customer destocking and change in regulations in Pharma, which will continue till Q3FY19. 2) While EAP reported strong growth, adverse product mix and higher wages dented profitability. 3) The Americas sustained a strong showing while Europe posted another weak quarter.

Outlook

With no clear signs of improvement in Europe, we are cutting the target FY20E EV/EBITDA multiple to 8.0 from 9.0 and TP to INR135. We believe EPL will return back to trading at a higher multiple only upon a clear revival in Europe.

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