Buy Essel Propack, target price Rs 240: Antique Stock Broking

Antique Stock Broking has initiated coverage on Essel Propack with a target price of Rs 240. The stock ended up 2.6 per cent at Rs 177.95 on Monday while BSE Sensex closed 59.28 points up (+0.19%) at 31,648.

Essel Propack Ltd., incorporated in 1982, has a market cap of Rs 5613.45 crore.

Investment Rationale


Given the acquisition of Essel by Blackstone, the company is on its clear path of value creation charted by the inhouse experts with an eye on prudent capital allocation and enhanced corporate governance, said Antique. Essel should get rerated further given the improvement in management practices post acquisition, efficient capital allocation, deleveraging and synergies expected out access to Blackstone's portfolio companies, said Antique.

Financials

Essel Propack's key products/revenue segments include Laminated Tubes which contributed Rs 798.72 crore to sales value (94.37 per cent of total sales); Royalty Income which contributed Rs 38.35 crore to sales value (4.53 per cent of total sales); Export Incentives which contributed Rs 5.27 crore to sales value (0.62 per cent of total sales) and Scrap which contributed Rs 3.97 crore to sales value (0.46 per cent of total sales)for the year ending March 31, 2019.
For the quarter ended December 31, 2019, the company reported consolidated sales of Rs 710.83 crore, down -2.70 per cent from last quarter sales of Rs 730.54 crore and up 2.36 per cent from last year same quarter sales of Rs 694.43 crore. The company reported net profit after tax of Rs 61.81 crore in the latest quarter.