Recommendations » India

CCL Products Q3FY13 results update

Contributed by Nirmal Bang

- Consolidated Revenues for the quarter were up 51% YoY/64% QoQ at Rs. 207 crore on the back of new Vietnam plant going on stream. This growth came in despite this plant facing some initial setbacks. However, with some equipment replaced plant is now running in line with expectations.

- Vietnam’s plant has a capacity of 10000 MT p.a and the company has plans to add another 5000 MT at this plant in FY14E.

- EBIDTA margins have gone down 200 bps QoQ mainly on the back of higher other expenses due to refurbishment and repair works taken at the Indian plant. In addition, there was a forex gain of Rs.2 crore in Q2FY13. Power cost also went up during the quarter with shortage of Power in Andhra Pradesh. However, company has made some 3rd party arrangements and expects it to get normalized in Q4FY13Q.

- Coffee prices have remained firm during the quarter.

- PAT was higher by 11% QoQ at Rs.15.2 crore despite higher taxes (39% of PBT) during the quarter. Management expects this to be lower in the next quarter.

Valuation & Recommendation

Current quarter results were above our expectations. Results were good despite some technical hiccups at the new Vietnam plant. Consequently, margins are also showing improvement (9MFY13 EBIDTA margins stand at 19.5% against 17% in 9MFY12) and we believe these can sustain with the company adding superior quality products into the portfolio.

We are marginally increasing our numbers for FY13E and FY14E on the back of good Q3FY13 numbers.

At CMP, the stock is trading at 6.4x and 4.8x its FY13E and FY14E earnings respectively. We continue to be positive on the stock and maintain BUY rating with a new target price of Rs. 400 based on FY14E earning expectations.