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Nirmal Bang Report
Robusta prices year-to-date CY2024 are trading ~30% higher than CY23 average, which itself was ~30% higher than 10-year average. Investors are concerned about the working capital requirements associated with it for CCL Products India Ltd.
While we believe that the management’s debt guidance largely factors in the anticipated price increase, our stress test suggests earnings per share downside in the ‘worst case scenario’ to be 9%/7% in FY25E/FY26E.
Despite supply side challenges, demand continues to be solid and CCL Products has commissioned India capacity during Q4 FY24. Maintain Buy (25 times price-to-earning) post roll-forward of valuation to FY26E earnings.
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