CCL Products Q3 Results Review - Ebitda Below Expectations; Maintain Hold Rating: IDBI Capital

IDBI Capital Report

CCL Products India Ltd.'s products Q3 FY24 operating performance was below our expectations. Its Q3 FY24 sales jumped 24% YoY to Rs 6,645 million even though coffee exports were impacted by the Red sea issue (~Rs 450 million). However, Ebitda grew by only 10% YoY to Rs 1,109 million as Ebitda margin contracted by 212 basis points to 16.7% led by weak product mix.

Net profit decreased by 13% YoY to Rs 633 million. Nevertheless, CCL continues to maintain its guidance of 18-20% volume growth and 18-20% Ebitda growth in FY24.

However, likely increase in debt over FY23-26 remains a concern in our view. We cut our FY24/FY25 Ebtida forecast by 10%/11% and we introduce FY26 forecast in this report. We now the stock at a price-to-earnings ratio of 20 times (earlier 24 times FY25) FY26E earnings per share to derive a target price of Rs 681 (earlier Rs 707) and maintain our 'Hold' rating on the stock.

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