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Research
Q3FY21 Result Update - EPL Ltd - ICICI Direct
Posted On : 2021-02-04 12:08:26( TIMEZONE : IST )
EPL's Q3FY21 performance was largely impacted by lower volume offtake in the Amesa and Europe regions. Revenues at Amesa regions (mainly India) fell ~6% YoY mainly due to lower volume offtake in the beauty & cosmetics and travel packs. European regions sales were impacted by a second wave of Covid-19 in most operating regions, resulting in lower-than-expected sales growth at 9% YoY during the period. However, sales growth in the EAP (mainly China) and Americas regions was strong at 17% and 19%, respectively, on a lower base, client addition and change in product mix. As a result, consolidated sales growth was at ~8% YoY in Q3FY21. According to the management, revenue growth in the Amesa and European regions will get restored, going forward, with consolidation of new businesses and client additions in coming quarters. On the margin front, EBITDA margin declined ~150 bps YoY 20.7% on account of employee costs and other expenses. The higher fixed costs were associated with Covid-19 related safety measures in Americas and higher Esop costs. The management has reiterated a capital efficient growth model, going forward, with lower debt/equity and focus on improvement in EBITDA margin, going forward.
Valuation & Outlook
We model revenue, PAT CAGR of 11%, 17%, respectively, in FY20-23E supported by lower interest outgo. We believe further improvement in margin along with recovery in AMESA region would be key variable to watch, going forward. We reiterate HOLD rating on the stock with revised target price of Rs. 250 (earlier Rs. 280), valuing at 11xEV/EBITDA FY23E EBITDA.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_EPL_Q3FY21.pdf
Shares of EPL LTD. was last trading in BSE at Rs.218.2 as compared to the previous close of Rs. 238.1. The total number of shares traded during the day was 102238 in over 4972 trades.
The stock hit an intraday high of Rs. 238.5 and intraday low of 210.05. The net turnover during the day was Rs. 22973028.
