Essel Propack’s (EPL) Q1FY16 revenue came in line moving up 5 per cent y-o-y at Rs.570 crore. Operating profit margin improved by 193 bps y-o-y (71 bps q-o-q) to 18.1 per cent. Highlight of the quarter was the impressive performance of the East-Asia Pacific (EAP) region. Revenues grew 16.8 per cent y-o-y versus estimate of 6 per cent y-o-y, driven by growth in non-oral sales. This is a significant turnaround as growth in FY15 was only 7.1 per cent. Non-oral revenues spiked 42 per cent y-o-y, taking its share in overall share to an all-time high of 30 per cent.
Despite the slowdown, oral care revenues were supported by addition of a new contract, which should support revenue growth going ahead. In addition to revenue growth, operating margins also expanded by 400 bps y-o-y, driven by improved top line and better product mix. The recent divestment of the Packaging India, not reflecting in these results, has cleansed the overall business and got it focused on core tubing operations. Overall, the improved operational performance and expected debt reduction post the divestment along with the improvement in EAP is paying off and setting the path clear for EPL to excel.
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