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IDBI Capital Report
CCL Products India Ltd.'s Q2 FY25 performance was above both our and street expectations. Sales jumped 21.5% YoY to Rs 7.4 billion, driven by robust volume growth (up 10% YoY) and higher realization (up 12% YoY).
Gross margin contracted by 218 bps YoY to 39.8%, due to high coffee bean prices. However, Ebitda grew 24.7% YoY to Rs 1.4 billion, with Ebitda margin expanding by 48 bps YoY to 18.6%, driven by an improved product mix. Profit after tax grew by 21.5% YoY to Rs 740 million.
CCL maintained its volume and Ebitda growth guidance of 10-20% for FY25. Management also indicated coffee prices remain volatile and expect stabilization post Dec-24 with the arrival of Vietnamese crop, which is likely to increase long term contracts.
We largely maintain our EPS forecast and value the stock at a PER of 25 times FY26E EPS, deriving a target price of Rs 734. We maintain our Hold rating on the stock.
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