CD Equisearch has given Hold recommendation for CCL Products (India) with a target price of Rs. 511 in its research report issued on Aug 26, 2022

CD Equisearch’s research report on CCL Products (India)

CCL Products produces several varieties and blends of coffee including spray dried coffee powder, spray dried agglomerated / granulated coffee, freeze dried coffee and freeze concentrated liquid coffee. Driven by near full capacity utilization (~85%) at its Indian and Vietnam units, CCLP posted volume growth of some 25% in the first quarter of current fiscal, thus helping the company post 56.2% growth in revenues to Rs 509.28 crs when compared to Rs 326.12 crs in the same quarter a year ago. Coffee sourcing from some of the small players – mostly generic products – has barely help diminished volume growth in last couple of quarters. With record product realizations, OPMs have all but fallen to 17.4% (22.1% in Q1 of previous fiscal) not least due to little variation in its pricing model (fixed per kg margins). Wherefore, operating profits rose by much diminished 23% to Rs 88.54 crs as against Rs 71.98 crs in the same quarter a year ago. Needless to say, margins have got a leg up from growing capacity utilization of its small packs facility, whose throughput surged past 50% in the last quarter. With depreciation costs up 25.5%, PBT rose by little enthusing 24% and post tax earnings advanced by 20.3% to Rs 52.74 crs as against Rs 43.84 crs in the year ago period.


Buttressed by higher volumes at new Vietnam facility, post tax earnings are projected to grow by some 29% next fiscal. Balancing odds, we assign “hold” rating on the stock with revised target of Rs 511 (Previous target: Rs 339) based on 24x FY24e earnings over a period of 6-9 months.

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At 15:46 hrs CCL Products India was quoting at Rs 479.90, up Rs 6.20, or 1.31 percent.

It has touched an intraday high of Rs 481.50 and an intraday low of Rs 471.55.

It was trading with volumes of 33,790 shares, compared to its thirty day average of 25,281 shares, an increase of 33.66 percent.

In the previous trading session, the share closed up 2.82 percent or Rs 13.00 at Rs 473.70.

The share touched its 52-week high Rs 514.90 and 52-week low Rs 315.60 on 02 February, 2022 and 11 May, 2022, respectively.

Currently, it is trading 6.8 percent below its 52-week high and 52.06 percent above its 52-week low.

Market capitalisation stands at Rs 6,384.01 crore.

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