Buy Huhtamaki India; target of Rs 375: ICICI Direct

ICICI Direct's research report on Huhtamaki India

Huhtamaki India (HIL) was incorporated in 1935 as Paper Product Ltd. In 1999, Huhtamaki Oyj acquired majority stake (currently ~67%) from the erstwhile promoter and changed the name accordingly. HIL is the leading player in the flexible packaging industry, providing packaging & labelling solutions to its clients through its ~18 plants and two R&D centres across India. The major client includes Nestlé, HUL, P&G, Mondelez, Coca Cola, etc. Further, we believe strong client base, launch of innovative products (backed by strong R&D of parent) & focus on expansions (organic+ inorganic) would help HIL expand its footprint in the domestic & international markets. As a result, HIL may witness revenue, PAT CAGR of 10%, 20%, respectively, in CY20E-22E supported by higher margin and saving in interest costs.

Outlook

We value the stock at Rs 375 i.e. 16x P/E on CY21E-22E average EPS of Rs 23. We assign a BUY recommendation to the stock.