Maintain buy on CCL Products with a revised target price of Rs 173, based on 15x FY16e EPS. We are raising our FY15e and FY16e EPS estimates by 7.5% and 4.9% in view of higher standalone volume. We estimate CCL to post strong sales and PAT CAGR of 25.5% and 54.3% respectively over FY14-16e coupled with healthy free cash flow and balance sheet de-leveraging.
CCL’s consolidated revenue grew 48.9% y-o-y primarily on better standalone volumes (up 29% y-o-y) and contribution from newly commissioned Vietnam plant (started contributing since Q3FY14). Standalone and Vietnam realisations fell by 2% y-o-y and 1% q-o-q, respectively. Consolidated ebitda margin slipped by 60 bps y-o-y to 19.6%. PAT stood at R26 crore versus estimate of R22 crore.
Management remains confident of achieving sales volume of 20,000 million tonnes in FY15. It indicated orders for 90% of the target volumes have already been tied up. In FY16, CCL is likely to achieve sales volume of 25,000 MT.
Management indicated that growth was mainly driven by superior performance in India and enhanced capacity utilisation in Vietnam. Management emphasised that it will continue to give preference to bolster volumes and improve utilisation. The company is expanding its Indian capacity from 15,000 MT to 20,000 MT with capex of R20 crore, which will be funded through internal accruals. The company expects expansion to be completed in 6-9 months.