Essel Propack - Result Update - ICICI Securities

Essel Propack (EPL) reported a flattish topline YoY led by Covid-19 related shutdown in Amesa and EAP regions (both regions contribute ~50% to revenue) while revenue from Americas, Europe increased ~4%, 16%, respectively, in Q4FY20. During the pandemic, EPL managed to classify itself under essential service provider category, (helped it to run operation across geographies with applicable government restrictions) thereby limiting the impact on topline. Further, recovery in profitability in EAP, Americas, Europe helped drive consolidated margin up 114 bps YoY in Q4FY20. We upgrade our rating from REDUCE to HOLD considering gradual recovery in Amesa regions, improving profitability in overseas business and strengthening balance sheet condition (D/E 0.4x, free cashflow of Rs. 333 crore).

Valuation & Outlook

We believe improved profitability along with balance sheet condition in the challenging scenario is encouraging. Further, the company's focus on 'capital efficient consistent earnings growth 'would help improve the return ratios, going forward. We upgrade our rating from REDUCE to HOLD with a revised price target of Rs. 190/share, valuing at 9x FY22E EV/EBITDA.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_EsselPropack_Q4FY20.pdf

Shares of ESSEL PROPACK LTD. was last trading in BSE at Rs.176.75 as compared to the previous close of Rs. 175.65. The total number of shares traded during the day was 2408 in over 96 trades.

The stock hit an intraday high of Rs. 178.4 and intraday low of 170. The net turnover during the day was Rs. 420913.

Source : Equity Bulls

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