CCL Products Research Report By Nirmal Bang

CCL Products (India) or CCL reported 21.7%/20.0% growth in revenue/EBITDA at Rs2,413mn/Rs456mn, respectively, because of a strong 109.2% revenue growth in subsidiaries with ramp-up of Vietnam operations. As a few consignments got advanced to 2QFY15 at domestic operations, up by a mere 3.9%, consolidated revenue growth was 6.6%/7.6% below our/Bloomberg consensus estimates, respectively. Excluding notional forex loss of Rs25mn against gain of Rs7.4mn YoY and Rs20mn donation, operating margin at 20.8% was 169bps/171bps above our/Bloomberg consensus estimates, respectively. On account of healthy cash flow, interest costs declined 34.9%. Net profit grew by a healthy 51.7% to Rs261mn,below our/Bloomberg consensus estimates of Rs288mn/Rs284mn, respectively, because of ~Rs45mn one-off expenses. Compared to 45% instant coffee sales to Tata Coffee, Russia accounted for only 17% of sales, with no adverse impact on forex/profit. With expected brownfield capacity expansion in India from 15,000tn to 20,000tn in 2QFY16, we have increased our net profit estimates by 2.4%/16.4% for FY16/FY17, respectively. Market leadership position with a 41.0% net profit CAGR, strong operating/free cash flow of Rs3.9bn/ Rs2.7bn, respectively, a 1,272bps RoCE improvement to 25.0% over FY14-FY17E and free cash flow yield of 5.7% with a debt-free status likely by FY17 calls for a strong re-rating. We have retained Buy rating on CCL with a revised TP of Rs245 based on 18x FY17E EPS (Rs183 earlier based on 17x average FY16E-FY17E EPS).

Download CCL Products-3QFY15 Result Update-20 January 2015

• This topic was modified 9 years, 10 months ago by Vidhi Khanna.
• This topic was modified 9 years, 10 months ago by Vidhi Khanna.
• This topic was modified 9 years, 10 months ago by Vidhi Khanna.