Buy AGI Greenpac; target of Rs 1520: Emkay Global Financial

Emkay Global Financial' research report on AGI Greenpac

The CG sector has, in the last 15 years, seen multiple ebbs and flows—demand volatility, overcapacity, and input-fuel cost spikes—with several players including erstwhile market leader HNGIL being left bankrupt; however, AGI with its innovative products and processes, cost efficiencies, and disciplined capital allocation clocked 13% revenue/15% EBITDA CAGR with a current return profile of ~15%. The Indian CG sector outlook is steady, with 4-5% volume/8- 9% value CAGR amid key user industries like AlcoBev, Food & Beverage (F&B), and pharma growing healthily while the input cost environment is benign, with soda ash and energy costs well-contained. AGI is expanding glass capacity by 30% to ~2,600tpd by FY27-end with a new Rs7bn plant in Madhya Pradesh, while also diversifying into the aluminium can segment (1.6bn capacity by CY30; Rs10bn capex), which is a fast-growing (15% CAGR), 2-player market in India currently. AGI also has smaller caps & closures and PET bottle businesses, which should grow in double digits on a low base. We estimate 17% revenue/29% APAT CAGR during FY25-28E with RoE/RoCE improving to 19% by FY28E. FY26-27 would be the capex phase, followed by healthy FCF generation, with 2% yield in FY28E and growth thereafter.

Outlook

We initiate coverage on AGI Greenpac (AGI) with BUY and Sep-26E TP of Rs1,520 based on DCF method, implying 19x Sep-27E EPS. AGI is a leader in the Indian container glass (CG) industry with >20% market share.

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AGI Greenpac - 23 - 09 - 2025 - emkay