Krungsri Securities (KSS) has reiterated its “Buy” recommendation on Indorama Ventures Public Company Limited (SET: IVL), maintaining its 2026 target price at THB 27 per share.
KSS highlighted that IVL’s core polyethene terephthalate (PET) business is entering a recovery cycle, fueled by limited new supply and global capacity rationalization—most notably in China, where producers are under increasing pressure to diversify their feedstock sourcing. According to KSS, these trends should help PET spreads return to breakeven faster, underpinning IVL’s earnings recovery throughout 2026 and 2027.
KSS flagged IVL’s ongoing merger of its subsidiaries, Indovida and EPL, as a major strategic development. IVL announced that this transaction, expected to complete within 12 months, involves EPL issuing new shares to Indorama Netherlands B.V., increasing IVL’s ownership in EPL to 51.8% from 24.9% without any cash outlay. The estimated transaction value is approximately THB 23,778 million.
According to a recent announcement on the Stock Exchange of Thailand (SET), the merger is aimed at capturing India’s rapidly expanding packaging market and strengthening IVL’s position in Asia. EPL will be able to expand its rigid packaging product range—leveraging Indovida’s capabilities—across the high-growth Indian market and into the broader Asian region. The deal also aligns with IVL’s long-term strategy of boosting its downstream packaging business, while delivering financial benefits by reducing the company’s net debt-to-equity ratio from 1.8x to around 1.50 – 1.55x. IVL targets a ratio of 1.1x by 2028.
KSS views the merger positively over the long term for several reasons:
1) It will allow IVL to combine its strengths in laminated tubes (EPL) and rigid packaging (Indovida) to better serve emerging markets, which are forecasted to achieve a 5–6% compound annual growth rate (CAGR) from 2025–2030.
2) Despite some short-term dilution, the transaction exposes IVL to India’s growth upside. The analyst firm noted that even if there is limited short-term dilution from merging Indovida at a discount, the long-term gains—particularly exposure to India’s strong growth dynamics—more than compensate. Indovida currently contributes about 8% of IVL’s total EBITDA, and the short-term dilution does not affect the company’s overall recovery trajectory.
3) The transaction achieves an effective indirect listing of Indovida without cash consideration, while reducing the company’s leverage, further supporting financial stability.
KSS continues to favor IVL based on its forecast for the company’s core PET business to sustain its recovery, supported by reduced global supply additions, ongoing cost reductions, and lower operational downtimes. The firm projects a +88% CAGR as normalized profit in 2026 to 2027 will turn positive, reflecting a strong rebound as industry conditions normalize and product spreads recover.
