Nomura has increased its target price for EPL to Rs 325 from Rs 300 while keeping a Buy rating. The move comes after a stronger‑than‑expected Q1FY27 performance and higher FY27 guidance. EPL’s ability to hit high‑teens sales growth and maintain a 20% operating profit margin despite rising raw material costs is highlighted as a rare achievement.
The brokerage has raised its FY27‑FY29 earnings estimates by 3% and forecasts a 12.5% EPS compound annual growth rate from FY26 to FY29.
EPL’s Q1FY27 sales jumped 25% year‑on‑year, beating Nomura’s forecast and the Bloomberg consensus of 17%. Growth was led by the East Asia Pacific region, especially China, which saw a 34% increase.
In other regions, sales grew 29% in the Americas, 20% in Europe, 17% across Africa, the Middle East and South Asia, and 20% in India. Underlying revenue growth, excluding commodity pass‑through pricing, was 20% year‑on‑year.
Personal Care & Beyond (B&C) grew 25% YoY, while Oral Care grew 24%, helped by price hikes. Reported operating profit margin (OPM) stood at 18.8%, and underlying OPM was 19.6%, reflecting a 15% YoY growth adjusted for commodity‑inflation pricing.
Nomura pointed out that this strong underlying growth is supported by early investments in new technologies, printing lines, tooling, innovation and value‑added processes. EPL has added more than 80 new customers in B&C over the past five quarters and is gaining market share with multinational corporations in Oral Care.
B&C now accounts for 54% of EPL’s sales, up from 43% in FY19. Recyclable tubes now make up 44% of volumes, compared with 10% in FY23, which Nomura sees as a competitive advantage.
New geographies and capital expenditure plans are driving further growth. Brazil’s growth exceeded the Americas average, and the Thailand plant—a $5 million greenfield investment—has started gaining traction. EPL aims to lift its ROCE from 18% to 25% by FY29, with higher FY27 capex for B&C capabilities and active pursuit of inorganic expansion.
Raw material cost increases were well managed. Gross profit margin contracted 75 basis points YoY but rose 40 basis points sequentially to 59.4%. Operating profit margin fell 165 basis points YoY to 18.8%, while EBITDA grew 15% YoY, ahead of both Nomura’s and consensus estimates.
EPL successfully passed most cost increases through pricing across all regions and customers. It expects a FY27 tax rate of 20% to 22% and remains confident in recovering the entire cost impact in future quarters.
Nomura’s key risk to the investment case is slower growth in B&C, but the brokerage maintains its Buy rating and target price of Rs 325.