INSUBCONTINENT EXCLUSIVE:
Emkay Global Financial Services has a buy call on Essel Propack with a target price of Rs 168.
The current market price of Essel Propack is
Rs 133.50.
Time period given by the brokerage is one year when Essel Propack price can reach defined target
Investment rationale by the brokerage-Mining Blackstone portfolio companies: Blackstone has deep and long-term relationships with few
With the acquisition, the PE firm would help ESEL increase the wallet share in these companies
Blackstone will also provide access to its global network of experts in order to streamline the manufacturing process
Non-oral care to drive growth: The ongoing shift toward laminated packaging from rigid/aluminum packaging by customers in pharmaceuticals,
beauty and cosmetics is expected to drive growth of laminated packaging companies globally
ESEL is uniquely positioned to capture this structural transition in the packaging industry
Blackstone will help ESEL tap customers in cosmetics and beauty segment in Europe, Latin America and China from its investee companies
Outlook and valuations: We upgrade ESEL to BUY with a revised target price of Rs168 as investors take note of long-term benefit with
We value ESEL based on 11x FY21E EV/EBITDA (vs
We expect ESEL to deliver 16 per cent EPS CAGR over FY19-21E, with ROE improving 330bps to 18 per cent in the same period
Key risks are 1) sharp rise in raw material cost and 2) slowdown in customer spending.