EPL Q3 Results Review - Strong Operating Performance Led By Improved Gross Margin: Motilal Oswal

Motilal Oswal Report

EPL Ltd. reported a strong operating performance in Q3 FY24, with Ebit rising 25% YoY, led by Ebit growth of 61%/13% YoY for the Americas/East Asia Pacific and a turnaround in Europe with Ebit of Rs 23 million (versus operating loss of Rs 36 million in Q3 FY23). On the other hand, Africa, Middle East and South Asia’s Ebit declined 3% YoY for the quarter.

We maintain our earnings estimates for FY25/FY26, while our estimate for FY24 has increased by 8% due to a lower effective tax rate (7.5%) in Q# FY24.

We value the stock at 20 times FY26E EPS (premised on a 5% discount to its 10- year average price/earning of 21 times) to arrive at our target price of Rs 275. Reiterate 'Buy'.

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