Healthy all-round performance; Margins up on shift in mix
EPL Ltd (EPLL IN) posted in line 2QFY26 (consolidated). Revenue grew 11% YoY and 9% QoQ to Rs 12.1bn (broadly in line), supported by strong performance in the Americas and EAP/China regions. Gross margin expanded 162bps YoY but contracted 59bps QoQ to 59.6% (estimate of 60%). EBITDA jumped 15.6% YoY and 12.5% QoQ to Rs 2.5bn (broadly in line). EBITDA margin of 20.8% (up 83bps YoY and 67bps QoQ; estimated at 20.5%) was driven by richer product mix, operating leverage, cost efficiency measures, and improved execution across regions. The Beauty and Cosmetics (B&C) segment continued to deliver exceptional performance, recording over 26% YoY growth, led by strong traction in the EAP and Americas regions. Management reiterated its double-digit revenue growth guidance for FY26. Raised FY26E/FY27E EBITDA margin by 50bps each but retained PAT due to higher tax rate. Reiterating BUY with a target price of Rs 301 (unchanged), based on 20x FY27E P/E (unchanged). Key risks: Subdued demand due to global recession, higher commodity prices, freight & logistic issues.
