MOSL: EPL (Buy)-Lower margins across regions, except AMESA
EPL: Lower margins across regions, except AMESA
(EPLL IN, Mkt Cap USD1b, CMP INR242, TP INR320, 32% Upside, Buy)
Earning lower than estimates
- EPL Ltd. (EPLL) reported a weak operating performance in 1QFY22 on the back of higher other expenses – due to an increase in freight costs and one-time expenses.
- Factoring in the 1QFY22 performance, we decrease our earnings estimate for FY22 by 6% on account of a slower pickup in volumes post the total shutdown in Colombia and the shutdown of its unit in Russia. On the other hand, we maintain our earnings estimate for FY23. We value the stock at 26x FY23E EPS to arrive at TP of INR320. Maintain Buy.
AMESA and EAP support revenue growth
- Revenue increased 8% YoY to INR7.9b (est. INR8.4b), primarily led by a strong performance from the AMESA and Americas regions. The EBITDA margin contracted 160bp YoY to 18.1% (est.19.4%) on higher other expense, with EBITDA at INR1.4b (down 1% YoY). Adj. PAT was down 4% YoY to INR579m (est. INR719m).
- AMESA revenue has increased 29% YoY to INR2.8b during the current quarter, driven by recovery in the Beauty & Cosmetics segment, with revenue share in Personal Care expanding 11pp YoY to 56.6%. EBIT margins have expanded by 370bp to 11% and EBIT to INR311m (up 94% YoY).
- EAP revenue edged up 2% YoY to INR2b due to the tapering of demand for hand sanitizers in the Personal Care product segment. The EBIT margin contracted 490bp to 16.7%, with EBIT at INR345m (down 21% YoY).
Essel Propack Limited. Essel Propack Limited (EPL) is a producer of plastic packaging material in the form of multilayer collapsible tubes and laminates used primarily for packaging of toothpaste, personal care, cosmetics, pharmaceuticals, household and industrial products. The Company's geographical segments consist of Africa, Middle East and South Asia (AMESA), which includes operations in India and Egypt; East Asia Pacific (EAP), which includes operations in China, Philippines and Hong Kong; Americas, which includes laminated tubes with operations in the United States, Mexico and Colombia, and Europe, which includes laminated tubes and plastic extruded tubes with operations in Germany, the United Kingdom, Poland and Russia. The Company offers specialized large diameter laminated tubes. The Company offers laminated tubes with features, such as thermal timers, product authentication, child protection and aroma sensory. It provides packaging solutions for products in paste or cream or gel forms.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.