Essel Propack - ZENMoney

Company Profile: Essel Propack (EPL), incorporated in 1982 and part of $2.4 billion Essel Group, is a specialty packaging company. The company, through its subsidiaries produces laminated and seamless or extruded plastic tubes, cap and closures, medical devices, Etain and Egnite. The company offers its products to cosmetics, personal care, oral care, pharmaceutical, food and industrial sectors. Essel Propack operates through various manufacturing facilities, such as laminate tube making facility, plastic tube making facility, speciality packaging facility and medical devices facility. The company is managed by four geographical segments such as Americas - (with operations in the USA, Mexico and Colombia; revenues @20%), Europe - (with operations in the UK, Germany, Poland and Russia; revenues @10%), AMesA - Africa, Middle east & south Asia (with operations in Egypt and India; revenues @50%), EAP - East Asia Pacific (with operations in China, Philippines & Indonesia; revenues @20%).

Strengths:

- Essel Propack is the largest specialty packaging company in India and is a leading global manufacturer of laminated (33% share in World market) and plastic collapsible tubes and laminates.

- Company's increased priority over high value non-oral segment could generate higher volumes and thereby higher revenues as well as profit margins.

Concerns:

- Company's growth is directly linked with FMCG sector's growth. Any slowdown in discretionary spending could impact company's earnings.

- Increase in raw material costs could impact company's margins as it imports majority of its raw materials. Also, global nature of operations exposes the company to currency fluctuations, which could impact it's earnings.

Outlook: Essel propack, on the back of it's high emphasis on value growth with volumes is expected to perform better in coming years with growing opportunities in specialty packaging segment. Company is also rapidly developing product/customers in the cosmetics, food and pharma categories with a view to maximizing value and tapping the benefits of a diversified portfolio, which is expected to get reflected in its margins in the future. Changing consumption patterns, greater exposure to global media trends, specific cultural imperatives, heightened health and beauty consciousness combined with widespread availability are providing opportunities for company's growth over time. Company's decent financials with continuous innovations, new launches, regular capacity expansions, plant upgradations and limited competition makes it a better player in this segment.

Source : Equity Bulls

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