CCL Products

hi folks!
I analyzed this business today by scrolling through the valuepikr threads only. I think thats a better option than reading through all concalls.

I know about the moats and cost-plus model of the business BUT
I have a quite neutral view of the business.

Cons:

1. Mediocre earnings growth

   

   10 year Profit growth : 15% while
   10 year stock returns : 25%
   hence speculative returns : 10%

   2. Branded Coffee Business is just 7.5% of their total revenue
   They commenced their branded coffee business around FY15 and they did around a revenue of 40 cr in the next year itself. Today their revenue from branded business stands around 200 crores which is around 7.5% of their total revenue.
   I think it is very insignificant right now and I guess this part of the business had been the thesis for most of the investor community.
   We have to see how it grows up. In my view, it might stay <10% of the total revenue in next 4-5 years. will be happy to be wrong here.

*Pros, not so pros: *
3. Its a slow, boring and compounding business. Honestly, a very good business to own for long term which gives you 15% compounded annual return with minimal downside because I believe the valuation multiples are hovering around their averages.
Also there is an optionality of branded business doing well and valuation re-rating because of that but that might come over 7,8 or 9 years in my view. A lot of patience is required for that.

Conclusion:
One can think of this as a defense stock.
Disc : I am not invested in CCL Products