Edelweiss' research report on CCL Products India
We see CCL embarking on higher growth trajectory and estimate revenue CAGR of 21% over FY17‐19 versus 5% during FY15‐17, led by volume growth. We expect resumption of supply of agglomerated coffee in Vietnam (at present being met from India) by Q3FY18, improvement in product mix and better utilisation to drive margins going forward.
We believe a resilient business model, rising utilization with market share gains, increasing focus on branded business and capacity expansion in value‐added segment places CCL in a sweet spot to post sales/PAT CAGR of 21%/26% over FY17‐19E. Thus, we raise our P/E multiple to 24x (15% premium to past 3 year’s average). At CMP, the stock trades at 20x FY19E EPS. We maintain ’BUY’ with a revised TP of INR 387.
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