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CCL Q1FY14 results update

December 4, 2013, Wednesday, 17:58 GMT | 12:58 EST | 22:28 IST | 00:58 SGT
Contributed by Nirmal Bang

CCL reported mixed results for Q1FY14. Though Q1 is a seasonally weak quarter, revenues were below our expectations and fell by 4% YoY. However, Operational performance was better with margins expanding 200 bps YoY and we believe these are sustainable with the company adding superior quality products into the portfolio. Company underwent maintenance in its Freeze Dried Indian plant during the quarter. Q3 and Q4 are seasonally strong quarters for the company. We expect flattish growth in Q2FY14E. At CMP, the stock is trading at a P/E of 5.6x its FY14E earnings which looks attractive. We maintain BUY recommendation on the stock.

- Consolidated Revenues for the quarter fell 4% YoY at Rs. 136 crore. Sales were below expectations due to maintenance work at the Indian Freeze Drying plant and fall in coffee prices by ~ 7- 10% during the quarter.

- Adj EBIDTA margins have improved 350 bps QoQ and 220 bps YoY to 22.2% on the back of lower raw material cost. This was despite the company incurring forex loss of ~ Rs.6 crore during the quarter against a loss of Rs.8 crore in Q1FY13.

- Company has partly paid back loans during the quarter due to which interest cost has come down to Rs. 4 crore for the quarter against Rs.7 crore in the previous quarter. Company does not have plans to pay back any more loans during the year.

- PAT grew 65% YoY/15% QoQ to Rs.12.5 crore on the back of lower interest and depreciation costs.

- Vietnam’s plant has a capacity of 10000 MT p.a and the company plans to add another 5000 MT for liquid coffee by Sep 2013 at this plant.

- For FY14E, management expects to produce 6500 MT at the Vietnam plant; while the current quarter performance at Vietnam was very dismal.

- Company had declared Bonus of 1:1 and Stock Split from Rs.10 face Value (F.V) to Rs.2 FV each.