EPL shares shed 5% as analysts fret over pace of revenue growth

“Europe business has higher dependence on personal care segment, hence a meaningful cut in discretionary consumption could impact EPL,” ICICI Securities said.

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Shares of EPL tumbled 5 percent on August 9 as analysts worried about the pace of revenue growth of the packaging company. At 10am, the stock was trading 5.1 percent lower at Rs 208.50 on the BSE.

Its consolidated net profit surged about 59 percent on-year to Rs 55.60 crore in the June quarter driven by better product mix with a rise in personal care mix, selective price hikes and lower input costs, analysts said.

Revenue was up 9 percent YoY at Rs 910.20 crore. However, ICICI Securities pointed out that the revenue growth in Europe slowed to about 8 percent YoY due to reduced consumption growth. Revenues in the Africa, the Middle East, and South Asia (AMESA) increased by only 5 percent YoY, impacted by Egypt’s currency devaluation and slower growth in India, it added.

EBITDA rose nearly 27 percent to Rs 159 crore with operating margin expanding to 17.47 percent in the June quarter from 15.10 percent a year ago, supported by price hikes.

“The Europe business has higher dependence on personal care segment, hence a meaningful cut in discretionary consumption could impact EPL,” the domestic brokerage firm said. A significant quantum of revenue comes from Europe.

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The company mentioned it has selectively raised prices in the Americas and Europe, while passing on lower input costs to customers.

Even the Brazil expansion plan has been delayed by a quarter, though utilisation rates have improved since July 2023.

ICICI Securities has trimmed its target price on the stock to Rs 230 from Rs 240) valuing the stock at 20 times its FY25 Earnings Per Share, while downgrading its rating on the stock to ‘add’ from ‘buy’.

EPL, formerly known as Essel Propack Ltd, is the largest specialty packaging global company, manufacturing laminated plastic tubes catering to the beauty and cosmetics, pharma and health, food, oral and home.

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