Essel Propack: Eyeing the globe - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Essel Propack: Eyeing the globe

Mar 26, 2003

Laminated tubes major, Essel Propack, had recently reported its consolidated numbers. The company's global sales stand at around 3 bn tubes, which is 25% of the global tubes market. In year 2002 (FY03), Essel reported over 13% topline growth, but profit growth was a marginal 5%.

(Rs m)FY02FY03Change
Net sales4,1234,66613.2%
Other Income5553-3.6%
Expenditure2,7713,16514.2%
Operating Profit (EBDIT)1,3521,50111.0%
Operating Profit Margin (%)32.8%32.2% 
Interest (net)114111-2.6%
Depreciation44455625.2%
Profit before Tax & extraordinary items8498874.5%
Tax17924134.6%
Minority interest1640150.0%
Extraordinary items-66-35 -
Profit after Tax/(Loss)6206515.0%
Net profit margin (%)15.0%14.0% 
No. of Shares (eoy) (m)31.131.2 
Diluted Earnings per share*19.920.9 
Current P/e ratio 6.3 
*(annualised)   

The company over the years, has acquired a global status, with presence in China, Egypt, Colombia, Venezuela, Mexico, Germany, Nepal and SE Asia. Recently the company commissioned a plant in Virginia, USA, to cater solely to P&G's laminated tube needs in the US and Mexico. Overall, going forward Essel will cater to 55% of P&G's global tube requirements, including China. For the first time, India's contribution has gone below 50% of revenues. Looking at the company's global presence, we believe this is a continuing trend.

India business (including Nepal and Egypt) recorded a marginal dip in topline. Toothpaste market has been facing tough times 2002 and the trend seems likely to continue in 2003 as well. Infact, in the December quarter, Essel's revenues dipped by 11% YoY. The company is also phasing out of Nepal owing to political disturbances in that country. Higher operating margins (owing to cost efficiencies) saw Essel posting an 18% net profit growth in FY03.

China (including Philippines) now accounts for over 30% of the company's revenues. The company has upped its market share in the region from 43% in FY02 to 50% in FY03. China region reported a 12% revenue growth and a 15% growth at the operating profit level. Essel is targeting a 60% share of this 2 bn tube market and has identified the region as its growth engine.

Europe (mainly Germany) grew by 23% in revenues. However margins in the region are not very lucrative owing to high competition. The Americas region (Colombia, Mexico and Venezuela) saw a marginal 2% growth in revenues. Here too, profitability is lower. Going forward the supplies to P&G in the US and Mexico will spearhead revenue growth from this region. However, the company has not disclosed what number of laminating tubes they are to supply to P&G.

At the current market price of Rs 132 the stock trades at 6.3x FY03 earnings. The valuations are quite low compared to Essel's earning potential and growth strategy going forward. However, sentiment towards the counter has been marred due to pomoter concerns and the fact that margins beyond Indian shores are not very lucrative.

Equitymaster requests your view! Post a comment on "Essel Propack: Eyeing the globe". Click here!

  

More Views on News

EPL Announces Quarterly Results (3QFY21); Net Profit Up 17.3% (Quarterly Result Update)

Feb 3, 2021 | Updated on Feb 3, 2021

For the quarter ended December 2020, EPL has posted a net profit of Rs 725 m (up 17.3% YoY). Sales on the other hand came in at Rs 8 bn (up 7.9% YoY). Read on for a complete analysis of EPL's quarterly results.

ESSEL PROPACK Announces Quarterly Results (1QFY21); Net Profit Up 13.3% (Quarterly Result Update)

Aug 24, 2020 | Updated on Aug 24, 2020

For the quarter ended June 2020, ESSEL PROPACK has posted a net profit of Rs 457 m (up 13.3% YoY). Sales on the other hand came in at Rs 7 bn (up 17.7% YoY). Read on for a complete analysis of ESSEL PROPACK's quarterly results.

ESSEL PROPACK 2018-19 Annual Report Analysis (Annual Result Update)

Jun 5, 2019 | Updated on Jun 5, 2019

Here's an analysis of the annual report of ESSEL PROPACK for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of ESSEL PROPACK. Also includes updates on the valuation of ESSEL PROPACK.

More Views on News

Most Popular

My Recent Recommendation Will Profit from the Global Supply Chain Crisis (Profit Hunter)

Mar 31, 2021

A tiny chemical company, started in the Licence Raj era, is a great example of a new wealth creating opportunity.

My Stock Trading Strategy (Fast Profits Daily)

Mar 31, 2021

In this video I'll show you exactly how I go about picking stocks for trading.

4 Stocks to Make Your Portfolio Immune to the Second Covid Wave (Profit Hunter)

Apr 6, 2021

Rather than predicting the market, successful investing is more about preparing well and placing your bets accordingly.

If the Market Falls, I Will Do This... (Fast Profits Daily)

Apr 1, 2021

What should you do if the market falls? In this video, I'll tell you what I will do.

India: Recovery Stalled by Vaccine Games? (The Honest Truth)

Apr 13, 2021

Ajit Dayal on how India's vaccine strategy will impact the markets.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

EPL SHARE PRICE


Apr 13, 2021 03:38 PM

TRACK EPL

COMPARE EPL WITH

MARKET STATS