CCL Products Research Reports By Nirmal Bang, Edelweiss & Karvy

Very Strong Performance On All Parameters

CCL Products (India) or CCL reported an all-round improvement in 1QFY16 performance with net revenue/EBITDA/PAT up by a healthy 25.1%/35.3%/49.5%, respectively. Following 182bps/54bps margin improvement at Indian/Vietnam operations, consolidated operating margin improved 167bps to 22.2%, 23bps/76bps above our/Bloomberg estimates, respectively. Key surprise was 19%/30.4% revenue/EBITDA growth at domestic operations. We expect the current margins to sustain following a better product mix and scale-up of high margin Vietnam operations. CCL added one large client in 3QFY15 in Europe for high-margin premium freeze dried coffee, where the ramp-up is happening at a faster pace. CCL is witnessing very good traction in the US market for products from its Vietnam plant in just the second year of its operations. CCL has started talks with equipment suppliers to double capacity at Vietnam plant, which indicates its confidence on the volume ramp-up front. Market leadership position with a 38.7% net profit CAGR, strong operating/free cash flow of Rs3.6bn/Rs2.5bn, respectively, a 962ps RoCE improvement to 25.6% over FY15-FY17E and free cash flow yield of 5.2% with a debt-free status likely by FY17 will continue the re-rating of CCL. We have retained Buy rating on it with a TP of Rs272, based on 20x/13.1x FY17E P/E and EV/EBITDA, respectively.”

CCL Products (India)-Initiating Coverage-27 August 2014

CCL Products-1QFY16 Result Update-22 July 2015

CCL-Edelweiss

CCL-Karvy