Capitaline

Analyst Meet / AGM 13-Nov-20

Conference Call

EPL

Creative will be highly accretive acquisition

EPLconducted conference call on 12 November 2020 to discuss the financial results and performance of the company for the quarter ended Sep'20. Mr. Sudhanshu Vats - CEO, Mr. M.R. Ramasamy – COO and Mr. Parag Shah- CFO of the company addressed the call
Highlights of the Concall

The company has changed its name from Essel Propack to EPL which is an effortless shorthand reflecting a transition from ‘high to higher' and its desire to ‘shift gears' to a new way of growth.

The company has acquired Creative Stylo Packs Private Limited (CSPL) at an enterprise value of Rs 253.9 crore. The company shall purchase of 72.5% stake of Creative Stylo Packs Private Limited (CSPL) through cash and the balance 27.5% stake will be purchased through issuance of EPL shares to Creative founders pursuant to merger of Creative into EPL. CSPL was founded in 2012 by two young entrepreneurs Bhavik Shah and Darshan Shah

The company expects the transaction to close in the last quarter of FY21

Creative Stylo Packs (Creative) FY20 revenue stood at 103.1 crore and adjusted EBITDA of Rs 30.5 crore (29.6% margin). The company has manufacturing facility in Himachal Pradesh with annual production of around 200 million tubes

Creative founders will become part of EPL's senior management team after the transaction and will play role in expansion of EPL's global business.

Creative will be highly accretive acquisition for EPL across dimensions. Creative FY18-20 revenue growth CAGR was 8.3%. Creative FY20 adjusted EBITDA margin was 29.6% compared to 20.3% of EPL

The company reported revenue growth of 11.1% YoY in H1FY21 despite Covid-19. EBITDA margin increased by 155 bps YoY to 20.7% driven by better product mix and productivity improvement

Net debt decreased to Rs 233.2 crore at the end of H1FY21 compared to Rs 430.7 crore at the end of H1FY20

RoCE rose to 21.4% in H1FY21 compared to 16.4% in H1FY20

Personal Care contribution declined to 46.8% in H1FY21 (v/s 52.4% in H1FY20) in Amesa due to sluggish demand in B&C (Beauty and Cosmetics segment ) on account of ongoing Covid-19 outbreak. However B&C is seen recovering in later part of Q2FY21. Timely innovation and launch of Hygiene products aided in boosting the H1FY21 performance

Personal Care contribution increased to 41.1% in H1FY21 (v/s 34.1% in H1FY20) in EAP. Growth is majorly driven by B&C and Pharma segments.

Personal Care contribution increased to 27% in H1FY21 (v/s 26.3% in H1FY20) in America. New customer wins across categories; bottle to tube
product conversions; cross-selling Personal Care products to existing Oral care customers

Personal Care contribution increased to 66.8% in H1FY21 (v/s 65.4% in H1FY20) in Europe. Strong new customer wins across Personal Care categories.

All 20 plants are currently operational

The company has build up additional categories of tubes and launched hand washes in tubes, hand creams, hand sanitizers. The company is envisioning becoming a large player in hand wash category going forward.

The company has declared an interim dividend of Rs 2.45 per share. The company expects to maintain the dividend amount going forward

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