Buy CCL Products; target of Rs 881: LKP Research

LKP Research's research report on CCL Products

CCL Products (CCL) saw robust 22% YoY growth in its topline owing to 10% volume growth YoY and higher contribution from value added high margin products volume growth came at the low end of management’s guidance of 10-20%. Steep inflation in coffee prices affected long term contract bookings. While the management had indicated demand deferment trends in the earlier quarters which saw volume growth drop from 15% in the previous quarter to 10% this quarter however, even though coffee prices are at all-time highs demand continues to remain sticky and is likely to support growth in the upcoming quarters. Management remains positive on coffee prices stabilizing at current levels, with the potential for moderation should favorable harvests emerge in key markets like Vietnam and Brazil. The company has reaffirmed its volume growth guidance for FY25, projecting robust growth between 10-20%.

Outlook

We maintain our ‘BUY’ rating and a TP of ₹881 at a PE of 28x of FY26 EPS of ₹31. We expect CCL to post a Revenue/ EBITDA/PAT CAGR of 19%/25%/29% respectively over FY24-26E.