Motilal Oswal: Essel Propack - Best Placed For Next Growth Trajectory
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Motilal Oswal Report
We interacted with Essel Propack Ltd.’s management to learn and discuss some key factors such as
1. future growth drivers, 2. improving performance in Europe, 3. gradual shift from plastic to laminated tubes, and 4. growing share of Personal care products.
Key insights highlighted below:
At the peak of Covid-19, Essel Propack launched a new product – ‘Hand Sanitizer’ tubes – in just 15 days to meet the sudden demand surge.
The Company plans to achieve sales volume of 150 million tubes in FY21, and is already close to achieving two-thirds of its annual volume target (100 million hand sanitizer tubes) by Q2 FY21.
This new product segment under Personal care is expected to provide steady volumes, as sanitizers are increasingly becoming a part of daily consumption.
Under Phase-I of project Phoenix, the Company managed to increase Ebitda margin by 180 basis point YoY to 20.2% in FY20.
The company has already initiated Phase-II of project Phoenix, which aims to expand margins further by virtue of cost management and rationalization.
Essel Propack’s already best-in-class margins (versus other domestic players) are expected to improve further.
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