Buy CCL Products, says SP Tulsian

One can buy CCL Products now and either keep a target of Rs 350 in 12 months time, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "CCL Products is the leading soluble coffee maker. They have two plants, one in Andhra Pradesh and second in Switzerland. This is the only company which is offering four types of soluble coffee from one place with the total capacity being at 22,000 tonne per annum."
He further added, "The comapny's financial performance is quite consistent and the growth of about 25-30 percent is already seen from the 9 months working, because top-line of Rs 475 crore for first 9 months of FY13 as against Rs 500 crore plus for FY12. That means the turnover or the top-line what they have achieved in 12 months has been achieved in the first 9 months, but the Profit After Tax (PAT) or the bottom-line has been almost identical Rs 36 crore for FY12 and Rs 36 crore for first 9 months resulting into Earnings Per Share (EPS) of Rs 27 plus for both the periods that is for FY12 and for 9 months of FY13. This indicates that the performance is consistent. If you break them in three parts they are all evenly distributed in all three quarters and that indicates that the EPS of Rs 36 can be expected for FY13 because not much growth is seen in Q4."
"Going forward because of the better realizations and penetration in the global market, I expect that probably they should be able to post an EPS of Rs 41-42 for FY14 taking a conservative growth of 11-12 percent also and going by the dividend track record, 50 percent dividend was paid by the company for FY12. Maybe in the current year it may get raised to about 50 percent with promoter stake of 40 percent and if you see the comparable peer that is Tata Coffee is ruling at very reach valuations in terms of the PE multiples and in terms of the absolute numbers also at close to about Rs 1,500 plus."
"So this stock looks to me a consistent performer. This gives a good amount of volatility also. You see the stock moving up by Rs 25-30 maybe in next couple of months then again corrects to the level of Rs 300. One can buy now and either keep a target of Rs 350 in 12 months time or look to trade in the range of Rs 280-320 where you get a lot of trading opportunity by becoming a short-term investor."