Khambatta Securities' research report on Ester Industries
Ester operates in the high-growth flexible plastic packaging, engineering plastic, and high-end speciality polymer spaces. The company has grown at a CAGR of 10.% in the 10 years from FY10 to FY20, driven by capacity expansions and productivity improvements. The company plans to expand its polyester films capacity to cater to future growth in demand. Demand for polyester films is expected to remain buoyant, driven by the consumer stapes and pharma sectors. A young population, increasing urbanisation, and rise in disposable income coupled with changes in lifestyle such as higher consumption of packaged food and beverages will drive demand for flexible polyester packaging in India.
Assigning a target P/E multiple of 8.0x FY22E EPS of Rs 16.40, we value Ester at Rs 131 with an upside potential of 77% and informing a BUY rating.
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