Buy EPL, target price Rs 275: Motilal Oswal Financial Services

Motilal Oswal Financial Services has buy call on EPL Ltd. with a target price of Rs 275.0. The current market price of EPL Ltd. is Rs 243.95 .

EPL Ltd., incorporated in the year 1982, is a Mid Cap company (having a market cap of Rs 7762.40 Crore) operating in Packaging sector.

EPL Ltd. key Products/Revenue Segments include Laminated Tubes, Service Charges, Royalty Income, Scrap and Export Incentives for the year ending 31-Mar-2023.


Rationale
We expect EPLL to report healthy sales growth and margin expansion, fueled by cost rationalization measures, margin improvement in Brazil, and operating leverage, thereby boosting its earnings.

We expect a revenue/EBITDA/adjusted PAT CAGR of 8%/16%/30% over FY24-26.

We largely maintain our earnings estimates for FY25/FY26. We value the stock at 20x FY26E EPS (i.e., at ~20% discount to the five-year average of one-year fwd. P/E of 24.7x) to arrive at our TP of INR275. Reiterate BUY.

Financials
For the quarter ended 30-06-2024, the company has reported a Consolidated Total Income of Rs 1013.90 Crore, down -3.00 % from last quarter Total Income of Rs 1045.30 Crore and up 10.18 % from last year same quarter Total Income of Rs 920.20 Crore. Company has reported net profit after tax of Rs 65.80 Crore in latest quarter.

Promoter/FII Holdings
Promoters held 51.5 per cent stake in the company as of 30-Jun-2024, while FIIs owned 11.35 per cent, DIIs 11.55 per cent.