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ICICI Securities Report
ICICI Securities has maintained its Buy rating on EPL Ltd. following the announcement of its merger with Indovida, a rigid packaging company. Post‑merger, Indorama Ventures will become the majority shareholder, holding a 51.8% stake in the merged entity.
According to ICICI Securities, EPL's valuation at a 35% premium to Indovida makes the merger EPS accretive.
The brokerage highlighted that the merger will allow the combined entity to become a multi-platform packaging company with a presence in wider geographies. The merged entity plans to leverage its capabilities for continued double-digit growth.
It will also have a large Ebitda of Rs 17.5 billion and low leverage at 0.25x ND/Ebitda, enabling it to pursue inorganic opportunities.
ICICI Securities views EPL's diversification into rigid packaging as a positive strategic move. However, it noted that expansion and execution in India's highly fragmented rigid packaging market remain key monitorables. The brokerage also flagged near‑term earnings volatility due to rising polymer prices as a potential risk.
Despite these near‑term concerns, ICICI Securities remains constructive on EPL's long‑term prospects and has reiterated its Buy recommendation with a target price of Rs 315, based on 20x FY27E price‑to‑earnings.
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