Essel Propack share price hits 52-week high on upbeat Apr-Jun quarter results, should you buy the stock?

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Published: July 31, 2020 11:57 AM

Essel Propack has capitalised the opportunities by launching timely products, which supported the revenue growth and will continue to aid the performance in the coming quarters as well

Essel Propack, essel propack share priceThe introduction of the hand sanitizer tube has resulted in another source of revenue generation for the company. 

Essel Propack shares zoomed 18 per cent to hit a fresh 52-week high of Rs 242.15 apiece, a day after the company reported a 14 per cent on-year rise in consolidated net profit at Rs 45.62 crore for April-June quarter. The company had posted a net profit of Rs 40.03 crore in the corresponding quarter of last year. Research and brokerage firms are upbeat on the stock with a buy rating. “In the medium-to-long term, the COVID-19 impact is expected to be minimal on Essel Propack’s performance as its products are classified as essential items. Moreover, the company’s diversified presence across the globe reduces the impact of the lockdown,” said Motilal Oswal Financial Services in a report.

The brokerage firm has recommended to buy Essel Propack with a target price of Rs 253, which is a 23 per cent upside from the previous close. The introduction of the hand sanitizer tube has resulted in another source of revenue generation for the company. 

At 11.40 AM, Essel Propack shares were trading 16 per cent higher at Rs 237.80 apiece, as compared to a 0.30 per cent fall in the benchmark S&P BSE Sensex. “Personal care growth was boosted by a surge in demand for hand sanitizers, which Essel Propack capitalised by signing up with 50 brands globally,” said Emkay Global Financial Services in a research report. The brokerage firm has given a ‘buy’ rating to the stock.  Management of the company mentioned that there was some spillover from the quarter ended on March 31 to the first quarter of this fiscal. “However, like-to-like growth was robust at over 70% in Personal Care after considering the effect of the spillover,” it added. 

Essel Propack’s revenue from operations was up 17.72 per cent to Rs 741.49 crore, as compared to Rs 629.83 crore in the corresponding quarter of the previous financial year. Total expenses came at Rs 669.04 crore. Research and brokerage firm Kotak Securities has maintained an ‘add’ rating to the stock, as Essel Propack’s quarter results were above its estimates. “Essel Propack’s focus on improvement in operating efficiency will augur well in the long run. We continue to remain positive on the stock given the strong business model,” the brokerage firm said. Kotak Securities also said that the company has capitalised the opportunities by launching timely products, which supported the revenue growth and will continue to aid the performance in the coming quarters as well. 

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