Shares of EPL (a leading global specialty packaging company) have continued their upward trend for the second consecutive trading session, gaining 8.5% intraday to reach an 11-month high of ₹219 per share. Since April, the stock has shown strong growth, achieving a 22% increase to date. Despite this positive movement, it remains approximately 32% below its peak of ₹318.60 per share, set in August 2020, following a period of financial underperformance.
The recent rally in EPL’s share price is driven by a strong demand for its products, fueled by robust interest from a diverse range of customers, including large multinational corporations and local clients. According to the latest report from Systematix Institutional Equities, EPL’s operations in Brazil are reporting strong EBITDA margins, capitalizing on its unique position as the sole strategic global tube supplier in a significant consumer market. This advantageous market presence includes key global customers, enhancing EPL’s strategic advantage.
EPL’s Brazil facility is well-positioned for substantial growth due to increasing customer demand for proximity to manufacturing locations. The company remains optimistic about maintaining strong margins, viewing Brazil as a key contributor to overall EBITDA margin enhancement. Systematix highlights that EPL anticipates ongoing opportunities in Brazil, pointing to significant potential for growth month by month.
This optimistic outlook is underpinned by a long-term strategy focused on profitable growth through several key initiatives. These include accelerating expansion in beauty and cosmetics, and pharmaceuticals, expanding market share across key regions, leading in sustainability to inspire customer adoption, and driving multi-year projects to sustain growth.
The global tubes market, valued at $42 billion in 2023, sees EPL as the largest manufacturer, holding a 20% market share and producing over 8 billion tubes annually. Specifically, EPL commands a 10% share in the $22 billion beauty, cosmetics, and pharmaceuticals segment, a 35% share in the $17 billion oral care market, and an 8% share in the $3 billion food, home, and industrial segment. Major customers include industry giants such as Colgate, P&G, L’Oreal, and Unilever.
Systematix notes several successful initiatives by EPL that have contributed to margin enhancement. These include restructuring in Europe, improving product mix, strategic pricing management, and cost optimization. Such initiatives bolster confidence in the company’s ability to achieve its targeted 20% EBITDA margin for FY25. The brokerage projects revenue, EBITDA, and PAT CAGR of 12%, 18%, and 42% over FY24–26E, respectively. Consequently, it maintains a ‘buy’ rating on EPL with a target price of ₹264 per share, based on an unchanged 20x FY26E P/E ratio.
EPL has established itself as the world’s largest specialty packaging company, specializing in the manufacture of laminated plastic tubes for a wide range of industries, including beauty, pharmaceuticals, food, oral care, and home care. The company’s shares experienced a sustained upward rally between CY12 and CY20, delivering an impressive return of nearly 1900%. This historical performance underscores EPL’s capability to generate substantial returns for its investors.
The company’s recent performance and strategic initiatives suggest a positive outlook. With strong demand from diverse customers, robust growth in its Brazil operations, and a clear focus on profitable expansion, EPL is well-positioned to continue its upward trajectory.
The company’s efforts in restructuring, cost optimization, and strategic market positioning are expected to drive sustained growth and enhance shareholder value. As EPL navigates the evolving market landscape, its commitment to innovation and efficiency will likely keep it at the forefront of the specialty packaging industry.
Investors and market analysts will be closely watching EPL’s next moves as it aims to solidify its standing and deliver consistent value in the competitive global market.
