Hope to win HUL deal for Rs 500cr over 5 yrs: Essel Propack

Written By Unknown on Senin, 04 Agustus 2014 | 21.04

Essel Propack  gains above 6 percent intraday on Monday on reports that the company is eyeing Hindustan Unilever 's oral care packaging deal which is likely to include the company's oral care brands like Pepsodent and Close Up in the domestic market. This is a stock that has already doubled on a year-to-date basis.

Speaking to CNBC-TV18, VC and MD Ashok Goel says the company hopes to seal the contract from HUL very soon. It will be a five-year contract with an approximate value of Rs 500 crore over the tenure, he elaborated.

Below is verbatim transcript of the interview:

Q: Is there anything on the cards with regards to this deal that we are hearing about, your stock is very excited today?

A: Yes, there is serious discussion that is ongoing and we expect to seal the contract very soon. So yes, the reports are true.

Q: What will be the size of the contract from HUL?

A: We do not talk about numbers but this is a five-year contract and the rough value over the tenure could be Rs 500 crore.

Q: Currently, you have 65 percent of the market share with regards to plastic laminated tubes, post this particular deal, where can that figure go up to?

A: When we talk about 65 percent of Indian market, I think the market itself is growing and therefore, I don't think there will be huge difference in terms of market share because the demand in this sector of FMCG is quite robust.

Q: With regards to oral care tubes, is the business comparatively a lower margin business? Will it have any kind of a repercussion on your margins?

A: No, in fact we have a healthy mix of oral care and non-oral care and our stated objective is that we should have 50 percent coming in from non-oral care. So oral care does provide the stability and the economies of scale therefore, it is not a villain as such and so India is already ahead of 50 percent global target and will therefore, not have that impact.

Q: What are the margins in the oral care business? On a consolidated basis, your margins come somewhere around 16 percent, can you break up these blended margins? What will be your margins then in oral care and non-oral care?

A: Nearly 16 percent margin - you are referring to this June quarter numbers - that was depressed by the flexible packaging business, which itself depresses my margin by about 1.1 percent global average but this particular quarter was bad for that business and therefore, it has pushed the EBITDA margin down by about 2 percent.

The percentage EBITDA margin is about 18-20 percent but global average comes down to 17-18 percent. In both the cases, EBITDA margin is same but the sales price in case of non-oral care is much higher. Therefore, absolute number is higher.

HUL stock price

On August 04, 2014, Hindustan Unilever closed at Rs 698.80, up Rs 4.95, or 0.71 percent. The 52-week high of the share was Rs 705.15 and the 52-week low was Rs 536.00.


The company's trailing 12-month (TTM) EPS was at Rs 18.05 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 38.71. The latest book value of the company is Rs 15.15 per share. At current value, the price-to-book value of the company is 46.13.


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