CCL Products India Ltd. share price target

The company has a total processing capacity of 35,000 MT per annum, having one of the largest capacity in India (20,000 MT) and Vietnam (10,000 MT). CCL Products' soluble instant coffee manufacturing plant is located in Duggirala Mandal, Guntur District, Andhra Pradesh, India (capacity of 20,000 MT per annum). CCL has set up a freeze dried instant coffee (a premium category of coffee) greenfield plant with capacity of 5,000 tonnes in Chittoor,...

We remain positive on CCL Product's strong business moat, market leadership in Instant Coffee production/exports and foray into branded retail business.

CCL Products (India) Ltd. (CCL) declared its Q2FY20 results recently. Consolidated net revenues grew by 3% Y-O-Y to `299 crs, impacted by lower realisation. Consolidated EBITDA for Q2FY20 decreased by 19% Y-O-Y basis to `62crs due to higher ad spend. Gross...

CCL Products India Ltd (CCLP) established in 1995, is the largest manufacturer and exporter of instant coffee (IC) in India. CCL Products is the largest exporter in B2B segment: Private Label (B2B) segment of the global instant coffee market is growing at a higher rate.

Raw material cost decreased by 19% Y-O-Y. Employee expenses and other expenses increased by 19%&8.5% Y-O-Y respectively. Depreciation increased by 17% Y-O-Y to `11 crs as SEZ came in operations from April 2019.EBIDTA margin for Indian...

CCL Products Q1FY20 revenue was in line with our forecast while EBITDA was 17.8% above our estimate. The company's EBITDA grew 9.0% YoY to Rs694 mn due to 377bps improvement in EBITDA margin to 25.4%. Despite 9.0% YoY growth in EBITDA, net profit decreased 12.1% YoY to Rs347 mn mainly due to higher tax rate at 36% in Q1FY20 vs. 24% in Q1FY19. Newly set up freeze dried plant sales stood at ~350 kt while Vietnam...

Sales volume declined as company has lost a 10-year-old client that contributed 5% to sales in FY19 (2000 MT @ `50 crs). The client has decided to backward integrate and start its own manufacturing unit. The company have added 20 new clients with total quantum of 500 tonnes p.a....

Distressed by a loss of a major customer (accounting for 2000 tons annual volumes), CCLP's revenues nerve-wrackingly tumbled last quarter (down 18.3%), resulting in some 24% drop in operating profit (yoy basis). OPMs slid to 20.6% from 22.2% in the same quarter a year ago, no smallish cut from peak margin of 26.2% in Q2, when optimum capacity utilization coupled with increased sales of small packs propelled margins. Despite attempts to reduce promotions in each of its domestic SKUs, plans are...

CCL Products (CCL) is one of the largest instant coffee manufacturers in the world. The company's key strength lies in its long-standing relationships with clients, expertise in coffee blends, cost efficiency and its pass-through mechanism to ensure margin protection. Over FY03-18, CCL has successfully scaled up its total capacity from 3,600 tonnes to 30,000 tonnes. Looking ahead, CCL remains well-poised to ramp up volumes from its recently set up 5,000 tpa freeze dried plant in Andhra Pradesh. We expect CCL's sales to grow at a CAGR of 17% over FY18-21E. We initiate coverage on the stock with a...

In Vietnam, Sales has declined by ~24% Y-O-Y in Q3FY19. We believe debt free status, better product mix and additional spray-dried capacity of 3500 ton by Q4FY20 would bring strong revenue and profitability growth in Vietnam. The management has guided 80% capacity utilisation for FY19 vs 60-70% in FY18. Incentives offered by Vietnamese government of zero tax rates will continue further....