13 November 2020
Essel Propack
2QFY21 Results Update | Sector: Midcaps
EPL
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
EPLL IN
316
79.4 / 1.1
319 / 126
-7/10/89
144
CMP: INR252
TP: INR326 (+30%)
AMESA and Europe drive overall performance
Buy
EPL Ltd. (EPLL) reported strong growth across Europe and the EAP region
amid the COVID-19 crisis. This was primarily led by an increase in market
share and new customer additions. Operating profit was offset by sluggish
performance in Oral Care in the AMESA region.
2QFY21 numbers were in line with our estimates, and we maintain our
estimates for FY21. However, in the backdrop of the acquisition, we increase
our earnings estimate for FY22/FY23E by 6%/3%. Maintain
Buy.
Revenue increased 5% YoY to INR7.7b (est. INR8b), primarily led by a strong
performance from Europe and the EAP region. The EBITDA margin expanded
70bp YoY to 21.6% (est. 21.1%), and EBITDA stood at INR1.6b (up 9% YoY).
This is attributable to revenue growth from personal care product sales and
improved operational efficiency across geographies. PBT grew 25% YoY to
INR1,019m (est. INR974m), primarily owing to a 38% YoY drop in interest
cost (to INR97m) and 68% YoY increase in other income (to INR32m). Adj.
PAT decreased 16% YoY to INR670m (est. INR722m).
In 1HFY21 revenue / EBITDA / adj. PAT grew 11%/20%/18%. In 1HFY21, EPLL
generated CFO of ~INR2b, up 6% YoY.
AMESA revenue increased 6% YoY to INR2.6b. EBIT margins expanded by
420bp to 14.8%, and EBIT increased to INR384m (up 49% YoY).
EAP revenue grew 9% YoY to ~INR2b on the back of a strong business
pipeline in China and increased focus on regional players. The EBIT margin
expanded 110bp to 20.7%, with EBIT at INR395m (up 15% YoY).
Americas revenue de-grew 7% YoY to INR1.5b. EBIT margins contracted by
470bp to 10.1%, and EBIT stood at INR155m (down 37% YoY).
Europe revenue grew 11% YoY to INR1.9b, driven by higher sale of personal
care products. EBIT margins expanded by 140bp to 8%, and EBIT stood at
INR158m (up 35% YoY).
EPLL announced the acquisition of Creative Stylo Packs (Creative) at an EV of
INR2.5b (for a cash consideration of INR1.6b for a 72.5% stake and balance
through 2.34m EPLL share issuances). Creative recorded revenue of INR1b in
FY20, with an EBITDA margin of 29.6% (at INR305m). It is valued at 8.3x
EV/EBITDA as of FY20 (v/s EPLL’s EV/EBITDA of 15x in FY20). Creative
manufactures plastic tubes (57% of revenue share), laminated tubes (36%),
and corrugated boxes (7%). Creative majorly focuses on personal care
products as the B&C segment contributes ~89% to the total tubes revenue,
followed by the Pharma segment, which contributes to the remaining share.
Financials & Valuations (INR b)
Y/E Mar
2021E 2022E
Sales
30.7
35.1
EBITDA
6.7
7.9
PAT
3.0
3.7
EBITDA (%)
21.8
22.4
EPS (INR)
9.3
11.5
EPS Gr. (%)
37.1
23.2
BV/Sh. (INR)
52.8
61.8
Ratios
Net D/E
0.2
0.1
RoE (%)
18.5
20.1
RoCE (%)
14.7
17.0
Payout (%)
47.7
38.7
Valuations
P/E (x)
27.0
21.9
EV/EBITDA (x)
12.4
10.5
Div Yield (%)
1.4
1.5
FCF Yield (%)
1.6
1.8
Europe continues on its growth trajectory
2023E
38.8
8.9
4.3
22.9
13.6
17.9
70.5
-0.0
20.5
18.1
35.5
18.6
9.0
1.6
5.9
Shareholding pattern (%)
Sep-20 Jun-20 Sep-19
Promoter
52.0
75.0
83.0
DII
15.3
2.4
2.1
FII
14.3
4.9
3.9
Others
18.5
17.8
11.0
Note: FII includes depository receipts
Research Analyst: Sumant Kumar
(Sumant.Kumar@MotilalOswal.com)
Darshit Shah
(Darshit.Shah@motilaloswal.com) /
Yusuf Inamdar
(yusuf.inamdar@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.