CCL Products an outperformer: Prabhudas Lilladher

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CCL Products an outperformer: Prabhudas Lilladher

Broking house, Prabhudas Lilladher is bullish on CCL Products and has maintained outperformer rating on the stock.

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CCL Products BSE | NSE 29/05/12 Are Mutual Funds betting on CCL Products?

Broking house, Prabhudas Lilladher is bullish on CCL Products and has maintained outperformer rating on the stock.

Prabhudas Lilladher report on CCL Products:

Q2 FY07 Result Update - Solid growth, Stable margins:

"CCL Products reported good Q2 results. Revenue grew a robust 61.4% yoy (and 61.1% qoq) to Rs 498 million. Profits jumped 47.3% yoy (and 32.4% qoq) to Rs 120 million. The EBITDA margin, which had shot up to 35.2% last quarter (an aberration) has been restored to the normal levels, at 29.1%. Top-line growth was largely volume-driven rather than value-driven. Against sales of 1,392 tons in Q2 FY06 and 1,345 tons in the previous quarter, the company sold 1,945 tons in this quarter. Last year the company did not sell freezedried coffee. Realisations were flat qoq-at about Rs 205-210 per kilogram for spray-dried (compared to Rs 180 per kilogram last year) and Rs 360-370 per kilogram for freeze-dried coffee."

"For H1 FY07, the company has thus reported revenue and profit of Rs 808 million and Rs 211 million, respectively 38.4% and 38.6% higher."

"All expansion plans are progressing as per schedule. By the end of this fiscal, capacity would be expanded to 14,500 tons - and further to 17,000 tons by FY08. Currently, the company is facing problems with the expansion at UK. Although land has been secured, certain approvals from the government are pending. With regard to its foray in the domestic market, concrete plans can be expected by December this year. Starting FY06, the company is liable to pay MAT, which would extend up to FY10. We have already assumed a tax rate of 14% in our FY07 and FY08 estimates."

"Even after these results we leave our revenue and profit estimates for FY07 and FY08 unchanged. On a consolidated basis, we forecast revenue to grow 32.8% in FY07 and 37% in FY08, to Rs 3,989 million and Rs 5,464 million, respectively. Profits are expected to grow 23.8% and 55.4% to Rs 485 million and Rs 753 million over the same period. The EBITDA margin is likely to remain stable - at about 22%.

"Based on the CMP, the stock trades at 12.6x FY07E and 8.2xFY08E earnings of Rs 38.4 and Rs 59, respectively. Maintain Outperformer."