CCL Products Q1 Result Review - Inline; Balance Sheet Leveraging A Key Monitorable: Nirmal Bang
Strong volume growth of 20% was mainly a function of new capacity in Vietnam.
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Nirmal Bang Report
Key Points
CCL Products India Ltd.’s Q1 FY24 Ebitda came broadly in line with our estimate and implies a volume growth of ~20% YoY. Management maintained volume growth guidance of 20% for FY24.
FY25E earnings downgrade mainly factors in elevated interest cost post the increase in debt levels, as highlighted in the earnings call. Key operating parameters like Ebitda/kg and volume growth remain intact.
Downgrade to 'Accumulate' with a revised target price of Rs 700 (25 times price-to-earning on June-25E earnings per share).
While we remain structurally positive on the business backed by the strong leadership, near-term issues related to balance sheet and recent run up in the stock price makes the risk-reward unfavorable from one-year time horizon.
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