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Nirmal Bang Report
Key Points
In a follow up conference call post Q1 FY24 earnings, CCL Products India Ltd.'s management discussed gross debt and expansion plans in detail.
Management highlighted that total debt by the end of FY24 and FY25 should be ~Rs13.5 billion and ~Rs 17.5 billion, respectively. Effective rate of interest is 6.6% (6% for working capital and 7.5% for term debt). A reasonable decrease in green coffee bean prices however could reduce the working capital requirements. ETR for FY24 and FY25 should be ~9% and ~12%, respectively at a consolidated level.
Upcoming India spray dried coffee and Vietnam freeze dried coffee capacities are expected to be commissioned from Q1 FY25 and H2 FY25, respectively. Capex for the same would be Rs 8 billion, of which ~Rs 6 billion is expected to be incurred during FY24. CCL Products would also incur capex on upgradation of select machinery and processes.
Robusta prices are at multi-decade high, which is creating a drag on balance sheet through elevated working capital requirements. Maintain 'Accumulate'.
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