Analysts gave a thumbs-up to Blackstone’s investment in Essel Propack LtdNSE 0.56 % (EPL), saying the deal would bring in customer revenue synergies, access to the fund’s global network of experts, capital for acquisitions or expansions and expertise in cost efficiencies.
The stock, according to analysts, is expected to rise about 25 per cent in the near term.
Private equity giant Blackstone announced that it would buy a 51 per cent stake in EPL from promoter Ashok Goel for $360 million, or Rs 134 per share. Blackstone will also make an open offer for another 26 per cent stake at Rs 139 per share. Post this deal, promoter Goel will retain a 6 per cent holding. Shares of EPL ended 0.85 per cent higher at Rs 133.50 on the Bombay Stock Exchange Tuesday.
“Blackstone has a stellar track record of generating value for investee companies,” Emkay GlobalNSE 0.88 % analyst Varshit Shah said, citing SH Kelkar (6x returns in seven years), MphasisNSE 0.13 % (2.5x returns in two years) and Intelenet (3x returns in three years) as examples.
Shah upgraded the stock to “buy” from “hold” with a target price of Rs 168, “as investors take note of the long-term benefit with Blackstone”.
Blackstone has made investments in different types of packaging companies across the globe, including ShyaHsin Packaging in China, Gerresheimer in Germany and Mivisa in Spain among others. The fund, according to analysts, could facilitate crossselling EPL’s products to some of these packaging companies.
Various innovative technologies developed by these companies could also be used by EPL to formulate better products. Presence of domain experts (including in lean manufacturing) could further aid in setting up robust systems and processes for improving efficiency and reducing cost, they said.
“EPL could benefit from Blackstone’s experience with other packaging companies, its management talent, and systems & processes — all these would likely accelerate customer acquisition and reduc ..
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