EPL - Innovation, Sustainability Remain The Key Focus Areas: Motilal Oswal

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Motilal Oswal Report

We expect EPL Ltd. to report a healthy sales growth coupled with margin expansion, fueled by cost rationalisation measures, margin improvement in Brazil, and operating leverage, thus boosting its earnings.

We expect a revenue/Ebitda/adjusted profit after tax compound annual growth rate of 10%/17%/31% over FY24- 26. We value the stock at 18 times FY26E EPS to arrive at our target price of Rs 250. Reiterate Buy.

EPL hosted the investing community, followed by a plant visit to its Vapi facility to showcase the technology, innovation, and processes used to improve its manufacturing efficiencies.

At the Vapi plant, EPL manufactures caps, tubes, and carries out lamination printing. The key takeaways from the visit are as follows:

Management demonstrated EPL’s manufacturing efficiencies that are driven by the implementation of automation across machinery. Automation has been the key focus area across processes for the company.
The company highlighted its CNI capabilities through which it aims to explore incremental business from the Beauty and Cosmetics market across existing geographies, with a major focus on the EU – the largest market. CNI is focused on innovation and sustainability in developing new tubes.
EPL aims to drive growth through its BNC segment and the Brazilian market, with margins improving gradually. The EU, the largest BNC market (13.8b tubes – 49% global share), prioritizes aesthetics and sustainability over pricing, thereby challenging low-cost conversion efforts. The company’s premium offerings by the CNI team target this market.

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