Essel Propack Research Report By Edelweiss

Essel Propack (EPL) is the largest laminated tubes packaging firm globally and a force to reckon with in the global packaging industry. Adhering to the growth cornerstones of innovation and customer-driven R&D, the company has captured one-third market share in laminated tubes. We expect RoE to exceed 21% in FY17 from 13.5% in FY14 as: (1) penetration in non-oral care segment is on the rise; and (2) subsidiaries in Europe and America are turning profitable. While Essel Propack has historically traded at 5-7x EV/EBITDA band, we have valued it at 7x considering that EPL’s RoE will transcend its historical range of 8-10%. Our target EV/EBITDA is at 21% discount to global peers despite Essel Propack’s margins being much higher. Initiate coverage with ‘BUY’ and target price of INR184 (57% upside).

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