Essel Propack (EPP), the world’s largest packaging company, is part of the Essel Group.
We expect the company to register an improvement in its performance on the back of low crude oil prices and stabilisation of new units.
We estimate the company to post 13.5% CAGR in Sales over the next two years and record consolidated profits of Rs44.4 crore in CY2010, as against the Loss of Rs88.3cr in CY2008.
At the CMP, the stock is trading at inexpensive valuations of 0.6x P/BV and 0.3x EV/Sales on our CY2010 estimates. We Initiate Coverage on the stock, with a BUY recommendation and a target price of Rs37.