For Q3FY18, CCL products (CCL) posted subdued set of results on a strong base of Q3FY17. The management expects a strong fourth quarter to achieve the yearly revenue growth guidance of 10%. Revenues degrew by ~5% yoy and while the operating margins were also lower on yearly basis.
Outlook and Valuation: We maintain our estimates in view of robust offtake expectations of its coffee in upcoming quarters. We expect CCL to report a revenue CAGR of ~18% over FY18-20E mainly due to (a) higher off take from upcoming facilities in India (b) higher B2C sales via Continental brand; and (c) better offtake in Vietnam facilities. On the bottom-line front, we expect a higher CAGR of ~26% to `229cr over the same period on the back of strong revenue and lower interest costs. Post the recent correction, the stock is trading very attractively at 19.3x its FY19E earnings. Thus, we maintain our BUY rating with the Target Price of `360.

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