Dear All,
Forwarding you the Result Update on Essel Propack for 4QFY2011 with a Buy recommendation and a Target Price of `58 (12 months).
Essel Propack’s (EPP) 4QFY2011 results were in line with our expectations. The company’s top line registered 16% yoy growth, while adj. PAT grew by 57% yoy. Overall, EPP continued to be profitable on the back of its robust re-structuring plan. Due to the recent correction in the stock price, valuations have become attractive; hence, we upgrade our rating on the stock to Buy.
Profitable performance continues: EPP‘s core packaging business recorded strong growth across regions. The AMESA region, primarily comprising India, recorded robust growth of 24% yoy, while Americas business grew by 22% yoy. However, EAP (mainly China) posted a marginal decline of 3% yoy to `60cr, while the key loss-making European region posted sales growth of 5% only.
Europe curtails loss: Most of the regions remained profitable during the quarter. The key loss-making European region, which had managed to curtail losses from `35cr in 3QCY2008 to `11cr in 3QFY2011, saw further reduction in losses to `3cr in 4QFY2011.
Outlook and valuation: We have revised downwards our FY2012 and FY2013 estimates to reflect the lower-than-estimated EBITDA margin for the FY2011 and a likely scenario of higher raw-material prices. At current levels, the stock is trading at attractive valuations of 0.6x FY2013E EV/Sales and 0.7x FY2013E P/BV. We recommend Buy on the stock with a target price of `58.
Kindly click on the following link to view the Report.
If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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