Buy CCL Products; target of Rs 437: Edelweiss

Edelweiss' research report on CCL Products

CCL Products India’s (CCL) Q4FY18 revenue and EBITDA at INR3.2bn and INR712mn came below our INR3.6bn and INR821mn estimates, respectively. This was on account of lower India business revenue as supply of agglomerated coffee started from Vietnam. However, APAT at INR472mn came in line with estimate as tax rate was lower at 24% versus 31% estimated and 33% in Q4FY17. Management has guided for 10-20% volume growth without factoring the impact of freeze dried capacity expansion (to be commissioned in Sept 2018). Our FY19 numbers are ahead of management’s estimates as we factor in the benefit of the capacity’s commissioning.

Outlook

Maintain ’BUY’ with TP of INR437 based on 24x FY20E EPS. Timely commissioning of the freeze dried capacity is key monitorable.