EPL Q4 Results Review - Brazil Drives Americas’ Growth; Underlying Demand Strong: Systematix

Systematix Research Report

EPL Ltd. reported consolidated Q4 FY24 revenue of ~Rs 10.3 billion, up ~6% YoY (in line), driven by healthy growth in Americas, with other regions registering low single-digit growth. Africa, Middle East and South Asia/India and East Asia Pacific/China grew at 5% YoY and 4% YoY, respectively, while both Europe and India standalone grew at 6% YoY each.

Americas reported robust 16% YoY revenue growth as Brazil operations commericalised and order inflows were healthy. The company reported highest ever quarterly Ebitda of Rs 1.9 billion (in line), up ~24% YoY. For FY25, management expects healthy volume growth and margin improvement in the Americas business. Robust growth in the underlying consolidated business was partly offset by negative pricing pressures.

On the sustainability front, EPL is focused on scaling up recyclable volumes and has surpassed its target of doubling volume growth in FY24, up 21% YoY. Management reiterated its double-digit revenue growth guidance and is confident of clocking 20% Ebitda margin in FY25.

While we leave our FY25E/FY26E revenue estimate unchanged, we have raised Ebitda margin by 100 basis points/50 basis points for the period. Higher Ebitda estimates factor in softening raw material prices, higher Beauty and Cosmetics contribution, where margins are accretive, and strategic price pass-through initiatives.

We raise earning per share for FY25/FY26E by 9%/7%. Reiterating 'Buy' with a revised target price of Rs 264 (Rs 248 earlier), based on 20 times FY26E earning price (unchanged).

Key risks: Global recession could keep demand subdued, spike in commodity prices.

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