Hold CCL Products, recommends Way2Wealth

Brokerage house Way2Wealth has recommended a hold rating on CCL Products, in its January 23, 2014 research report.

January 23, 2015 / 19:01 IST

26 Aug, 2025 12:21

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Way2Wealth's research report on CCL Products

"CCL Products, standalone net sales for Q3 grew by 3.9% YOY to Rs 171.2 crs driven primarily by volumes. For 9MFY15 standalone Topline registered a growth of 11.7% at Rs 499 crs. On a consolidated basis net sales grew by 21.7% to Rs 241.3 crs. Subsidiaries sales were up 109% YOY to Rs 70 crs. Vietnamese operations picked up pace this quarter. For FY15 the company expects consolidated volumes of ~20,000 MT in which Vietnam will contribute ~5000 MT. We expect Topline to grow at ~20-22% CAGR over the next 2 to 3 years."

"On the operating level the mix was tilted towards premium coffee due to winter season. Operating profit in standalone operations was impacted by some onetime expenses namely, onetime Rs 3.7cr (notional forex loss), Rs 2cr donation AP CM fund. Operating profits were at Rs 32.8 crs lower by ~4% YOY. Operating margins contracted by 160 bps to 19.1% due to onetime expenses namely, onetime Rs 3.7cr (notional forex loss), Rs 2cr donation AP CM fund. Consolidated EBIDTA for Q3FY15 grew by 20% to Rs 45.6 crs with margins contracting by 30 bps to 18.9%. Margins in the subsidiaries were at ~18% with absolute level operating profit at ~Rs 12.8 crs. For the 9MFY15 period operating profit on the consolidated basis grew by 27.8% to Rs 130crs with margin contraction of 70 bps to 19.6%. On the PAT level standalone operations was higher by 4% at Rs 19.5 crs as tax rate for the quarter was higher at 34.5% due to lower depreciation. Consolidated PAT grew much faster at 51.9% to Rs 26.1 crs on the back of Vietnamese operations breaking even on the PAT level as well as higher operating leverage from Vietnamese operations which is in a tax free zone. _ We expect Operating profit margins to remain in range of 19-20%. PAT will grow much faster as Vietnamese operations ramp up and Swiss unit to become PAT positive. The tax holiday will further perk up growth. We expect PAT to grow by ~35-40% for the next 2 to 3 years."

Outlook & Valuations:"We believe the growth levers for CCL products to be well placed. The company's focus on growing its presence in the domestic market with a strong brand coupled with ramp-up of Vietnamese operations will pave the road to healthy profitable growth for the next 2-3 years. At the CMP of Rs 185/- the stock trades at 24.8x & 17.4x its FY15E & FY16E estimated EPS of Rs 7.4/- & Rs 10.6/- respectively. We recommend investors to HOLD the stock", says Way2Wealth research report.

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