'Buy' EPL Shares Maintains Systematix, Sets Target Price Of Rs 324 — Here's Why

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Systematix Report

EPL Ltd.’s promoters, Blackstone, has entered into a definitive agreement to sell a minority stake of 24.9% (79.5 million shares) in the company to Indorama Netherlands, B.V., a group entity of Indorama Ventures Public Company Ltd., at Rs 240 per share.

IVL brings global expertise in packaging and has a complementary geographic presence. IVL’s business spans packaging, recycling, and specialty chemicals, serving marquee customers across diverse global markets, in pharmaceuticals, cosmetics, and personal care.

Its strong presence in Southeast Asia and Africa complements EPL’s leadership in India, China, Europe and the Americas.

We view this transaction as positive for EPL, considering the entry of IVL as a strategic investor would strengthen EPL’s growth prospects and aid market expansion. Management reiterated its commitment towards long-term sustainable growth and healthy margins.

We estimate revenue/Ebitda/PAT CAGR of 11%/14%/31% over FY24-FY27E, respectively, and maintain Buy with a target price of Rs 324 (unchanged), based on 22x FY27E P/E (unchanged).

Key risks: Global recession could keep demand subdued, spike in commodity and freight prices and logistics issues.

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