Buy CCL Products; target of Rs 300: Nirmal Bang

“CCL Products India, Revenues for the quarter were higher by 42.5% YoY to Rs.140.7 crore despite expected Vietnam plant production deferred to September 2012. Coffee prices also have remained firm during the quarter. EBIDTA margins (excluding the forex loss of Rs.8.3 crore included in the other expenses) were higher by 340 bps YoY at 20%. PAT was higher by 46% YoY at Rs.7.6 crore on the back of lower tax rate during the quarter. Company has declared a final dividend of Rs.5 for FY12.”

“Vietnam plant was to begin commercial production from the month of May which has been deferred to September 2012. Currently, trial runs are being conducted at the Vietnam plant. CCL kept his plant shut for 20-25 days in the current quarter for up gradation of plant technology. This would have some effect on the Q2FY13 revenues and are expected to be flattish. New technology is expected to bring in more efficiency in productivity.”

“Performance in the current quarter in terms of Sales and Margins are a surprise despite the Vietnam plant getting delayed. We are marginally reducing our FY13E projections and introducing FY14E numbers in our update.  We had recommended the stock at Rs.223 on 15th June 2012 post which it hit a high of Rs.271. At CMP, the stock is trading at 5.5x its FY13E earnings and the outlook continuous to be positive. The stock might remain subdued post the Q1FY13 results and we recommend investors to use this opportunity to BUY the stock on declines,” says Nirmal Bang research report.    

Public holding more than 90% in Indian cos

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