The packaging industry does not usually grab daily headlines, but it quietly powers some of the world’s largest fast-moving consumer goods brands.
The brokerage house Nomura has identified one such packaging player where it sees significant upside potential.
The company in focus is EPL. Nomura has assigned a ‘Buy’ rating to the stock and set a target price of Rs 350. This implies an upside potential of about 60.6% from the current market price.
According to the brokerage report, the company’s recent quarterly performance and medium-term growth plans support this optimistic view.
Let’s take a look at the key reasons why the brokerage house is bullish on this stock and rationale behind it –
Strong revenue growth led by key regions
According to the Nomura report, EPL delivered double digit revenue growth of 13.3% YoY in Q3FY26. This was higher than both Nomura’s and Bloomberg’s consensus estimates.
The growth was largely driven by East Asia Pacific and the Americas, which grew 18% and 19% YoY respectively.
The report noted that “EPL continued its double-digit revenue growth with 13.3% y-y in Q3.” In AMESA, which stands for Africa, Middle East and South Asia, revenue rose nearly 10% YoY. India contributed meaningfully to this growth.
Beauty and Cosmetics, often abbreviated as B&C, remained the standout segment. The brokerage report highlighted “strong double digit growth in B&C across all regions.”
Three growth drivers for the next phase
Nomura believes the next leg of growth could be supported by three structural drivers. The brokerage report pointed that management believes the “best is yet to come” and expects to sustain profitable double digit value growth.
First, accelerating momentum in Beauty and Cosmetics remains central. According to the brokerage report, EPL plans to continue investing in technology and innovation to support this segment.
Second, expansion in emerging markets is gaining traction. According to the brokerage report, EPL aims to scale operations in high consumption Southeast Asian markets and explore other high growth regions.
Third, sustainability is becoming an important growth enabler. The brokerage report noted that recyclable volumes as a percentage of total tube volumes increased to 38% in YTD FY26 compared to 33% in FY25.
Margins remain stable, valuation supportive
Profitability metrics have also held steady. Gross Profit Margin expanded 35 basis points YoY to 60.6%. Operating Profit Margin stood at 20.1%, slightly lower sequentially due to temporary weakness in Europe.
EBITDA grew 14% YoY, above Nomura’s estimates. The brokerage maintains its target price of Rs 350 and values the company at 22 times price-to-earnings ratio based on December 2027 estimated earnings.
Nomura adds that the stock trades at about 15 times estimated March 2027 earnings per share and is currently below its long-term trading average.
Conclusion
Overall, according to the Nomura report on EPL, strong momentum in the Beauty and Cosmetics segment, improving margins and increasing focus on sustainable packaging positions it well for continued expansion in the coming years.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.