Buy CCL Products; target of Rs 258:CD Equisearch

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26 Aug, 2025 12:21

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CD Equisearch's reserach report on CCL ProductsCCL Products manufactures a wide range of powdered and granulated coffee (more than 70 varieties and blends) from its plants in India, Vietnam and Switzerland. Its products include soluble instant spray dried coffee powder, spray dried agglomerated / granulated coffee, freeze dried coffee and freeze concentrated liquid coffee. In addition to soluble instant coffee, which is manufactured at Guntur district, Andhra Pradesh, it also supplies flavored coffee, decaffeinated coffee, organic coffee, rainforest coffee, fair trade coffee, dual and triple certified coffee as well as chicory-coffee mix. Its plant is equipped with latest instant/ soluble coffee technology purchased from globally renowned Swiss and Brazilian manufacturers. Adaptation of this technology has allowed the company to manufacture top quality soluble coffee, which is being exported to over 60 countries across the globe. Being an EOU, it has rights to import duty free green coffee from any part of the globe and export processed coffee across the globe. For its contribution to the global coffee market, CCL Products has been duly awarded by Ministry of Commerce, Government of India and the Coffee Board of India. It has couple of subsidiaries in Vietnam and Switzerland - Ngon Coffee Company Ltd and Grandsaugreen SA respectively. The former, with a spray dried coffee annual capacity of 10000 mt, manufactures instant / soluble spray dried coffee. It also plans to commence a 5000mt pa freeze concentrated liquid coffee plant by next fiscal. The latter boasts of 3000 mt per annum ofagglomeration capacity and 4000mt pa of packing capacity.The stock currently trades at 21.9x FY16e EPS of Rs 9.61 and 17.2x FY17e EPS of Rs 12.28. CCL’s relentless business growth over the last few years has caught investors unawares. Yet risks of slowdown in off take in rapidly expanding markets like China looms large. Weighing risks against potential business growth (average earnings growth nearly 32% over the next two years), we recommend investors buy the stock for a target of Rs 258 based on 21x FY17e earnings (peg ratio: 0.7), over a period of 9-12 months.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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