If you have ever closed a company's cash flow statement because it looked ugly and never opened it back up, you have probably walked past a stock exactly like this one before.

Here is a bitter number, the kind that should scare you off a stock: in 2025, ILPRA's cash flow statement showed a 6.65 million EUR outflow from rising inventory.

Here is the number that sweetens it: 4.57 million EUR of that "outflow" was never spent. It was inventory the company acquired when it bought another business, not cash it burned running one.

That gap is the whole reason this stock is still cheap. Most investors read the cash flow statement and stop. We kept going.

ILPRA is a 71-year-old Italian manufacturer of packaging machines, listed on Euronext Growth Milan under the ticker ILP. We bought 600 shares on 2026-09-16 at 7.95 EUR, a 4,770 EUR starter position in the Compounding Portfolio.

Here is what we found underneath the confusing accounting.

What ILPRA Actually Does

Founded in 1955, ILPRA builds tray sealers, thermoformers, filling and dosing systems, and form-fill-seal machines. Its customers include Unilever and Nestle. Picture the line running for months before a customer signs off on it: the machine custom-built at ILPRA's own factory, tested on-site, the packaging tuned to the exact food, cosmetic, or pharma product it will run for years. Once that line is qualified, ripping it out means re-qualifying the whole thing from scratch. That is a real switching cost, not a loyalty program.

Every machine ILPRA sells also creates a second, quieter revenue stream: maintenance and spare parts, already at least 20 percent of sales and growing as the installed base gets bigger. New-machine sales are lumpy. Service revenue is not.

FY2025 (audited figures, released 2026-03-30): consolidated revenue 84.0 million EUR (up 20.2 percent), EBITDA 16.2 million EUR (up 10.7 percent, 19.3 percent margin), EBIT 10.9 million EUR (up 11.1 percent), group net profit 6.1 million EUR (up 14.0 percent). Foreign markets were 62 percent of revenue.

One honest wrinkle: EBITDA margin actually slipped from 21.0 percent in 2024 to 19.3 percent in 2025. Management's own explanation, on the record, is that it hired to build out the team ahead of more growth, not that the business got worse. Worth watching, not worth panicking over.

The Moat Nobody Is Pricing

ILPRA operates in a market of roughly 634 packaging-machine makers worldwide, and more than 65 percent of them do under 5 million EUR in revenue. That is not a market with one big winner. It is a market built for a disciplined consolidator, and ILPRA has been running that playbook for years: buying niche players (Gelmini, Veripack, Pentavac, MACS, IDM Automation) at roughly 8x EBITA, usually leaving the seller's management a minority stake so they stay motivated instead of cashing out.

Two of its direct Italian competitors, Reepack and Italian Pack, are privately held and cannot use public equity as acquisition currency. Its one public peer, IMA SPA, got taken private by a private equity firm at a materially higher multiple than ILPRA trades at today. ILPRA is close to the last public, scaled consolidator standing in its own niche.

Founder-CEO Maurizio Bertocco has run ILPRA's international expansion for decades and still holds a large stake alongside his family. He has been showing up to the same factory floor in Mortara for over 40 years, and his family still owns most of what he built there. The company opened a UAE branch and, as of late 2025, an Australian one, taking it to 12 countries. This is not a business coasting on its home market, and it is not a business being run for one more quarter.

The Number That Made Us Pay Attention to This One Specifically

On 2026-06-04, ILPRA placed 366,600 ordinary shares, worth about 2.4 million EUR, with Independance AM, a real institutional fund that took a 2.55 percent stake. Not a promotional press release about "interest from investors." An actual fund, buying actual shares, at roughly 6.55 EUR. There is something in the air when a real fund buys quietly into a stock nobody is covering, before the crowd shows up. The stock has since climbed to 7.95 EUR, up about 21 percent in three months.

We are not first. We are early enough.

The Math, in Our Own Model

At 7.95 EUR, ILPRA's market cap is about 95 million EUR. Add net debt of 22.7 million EUR (up from 20.1 million in 2024, mostly from four acquisitions plus a real inventory build, not from the core business bleeding cash) and enterprise value is about 118 million EUR, or roughly 7.3x EBITDA. That is a discount multiple for a company compounding EBITDA at double digits.

We built our own 3-year, five-scenario model off that base, independent of any single source's numbers.

Super Bull (10% probability): organic growth reaccelerates, the M&A machine keeps running, margins recover past 20 percent, and the market finally re-rates the stock toward 11x EBITDA as more funds like Independance AM show up. Price: roughly 24.75 EUR. Return: about 46 percent per year.

Bull (25%): steady 14 percent per year EBITDA growth, multiple drifts up to 9x. Price: roughly 16.70 EUR. Return: about 28 percent per year.

Base Case (35%): EBITDA compounds around 10 percent per year, on target for both the organic growth trend and continued small bolt-on M&A, multiple edges up to 8x. Price: roughly 12.47 EUR. Return: about 16.5 percent per year. This is close to the 17.2 percent base-case IRR that first put ILPRA on our radar, from a research source we trust for exactly this kind of line-by-line work.

Bear (22%): the broader packaging-machinery market (growing only about 3 percent per year, per industry data) becomes the reality here too, the acquisition pipeline slows, and the multiple compresses back to 6x on renewed illiquidity concerns. Price: roughly 6.50 EUR. Return: about negative 6.5 percent per year.

Super Bear (8%): an acquisition integration goes wrong, the working-capital build turns into a real cash problem, and the multiple craters to 4.5x. Price: roughly 2.95 EUR. Return: about negative 27 percent per year.

Probability-weighted expected return: roughly 13.8 percent per year. That clears our 12 percent hurdle on our own, more conservative model, before crediting any of the upside a re-rating could add.

What Would Break This

The thesis breaks if the acquisition pipeline dries up (this is a roll-up story; without deals, it is just a decent industrial with a mid-teens margin), if net debt keeps climbing without EBITDA catching up (1.40x EBITDA today, still fine, worth re-checking every earnings release), or if the free float stays thin enough that a bad quarter turns into an outsized price move on almost no volume. Minimum trade size on this stock is about 600 shares, roughly 4,770 EUR at today's price. Illiquidity is a real risk here. The business is not.

Why We Sized It as a Starter, Not a Conviction Bet

We took 600 shares, not a full allocation. The IRR clears our bar. The moat is real but narrow: a fragmented-market roll-up with switching costs and a growing service annuity, not a wide-moat monopoly like the toll-road names already in this portfolio. We want to watch two more quarters of net debt and margin trend before deciding whether this becomes a bigger position or stays a starter.

That is the whole discipline. Buy the moat you can actually explain in three sentences. Size it to how sure you are. Let the next earnings report do the rest of the talking.

We will report back the moment net debt crosses 1.5x EBITDA or the next earnings print lands, whichever comes first.

We size every position this way. The moat has to fit in three sentences, the kind you can grip in one hand. The position has to fit the size of our conviction. Casino, not gambler.

None of this is financial advice. We disclose our own trades for transparency, not as a signal to copy. Size your own position to your own conviction, and do your own research before buying anything, including this one.

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Happy hunting. Simon & The Sprinters 🐬⚡️🐆