Buy CCL Products India; target of Rs 844: LKP Research

LKP Research's research report on CCL Products India

CCL Products delivered a strong Q4FY25 with revenue up 15.1% YoY to ₹8.4bn and EBITDA rising 38% YoY to ₹1.6bn. Margins improved sharply, with EBITDA margin at 19.5% and PAT up 56% YoY to ₹1.0bn, supported by a better product mix and operating leverage. Management reaffirmed 15–20% EBITDA and 10–20% volume growth guidance. The branded business grew 20% YoY to ₹2.10 bn, now 10% of revenue, with strong traction from the “Continental Coffee” brand. Domestic sales rose 13% to ₹5.03 bn, driven by B2C expansion and wider distribution beyond South India. CCL remains well-positioned for double-digit volume growth, backed by ramp-up in Vietnam, rising specialty coffee share (~5% of sales), and a cost-efficient model. Despite near-term raw material volatility, coffee prices are expected to stabilize in FY26, easing working capital pressure.

Outlook

We expect debt to peak at ₹18.6 Bn, with margins supported by a resilient cost-plus model. We revise our TP to ₹844 (from ₹780), valuing at 25x FY27E EPS of ₹34, and maintain our ‘BUY’ rating with FY24–27E Revenue/EBITDA/PAT CAGR of 19%/20%/19%.

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