RESULT UPDATE HOLD `263/- MAY 30TH, 2019

. CCL Products (India) Ltd.

Sensex 39832
Summary
Nifty 11946
Consolidated net revenues decreased by 18% YoY to `262crs owing to lower green coffee
Key Stock Data prices and loss of a large client (annual volume of 2000 MT with revenue of `50 crs).
Consolidated EBITDA for Q4FY19 decreased by 24% to `54crs YoY.
CMP 263
Market Cap (`Crs) 3498  Sales volume declined as company has lost a 10-year-old client that contributed 5%
52W High/Low 309/225 to sales in FY19 (2000 MT @ `50 crs). The client has decided to backward integrate
Shares o/s (Crs) 13.30 and start its own manufacturing unit.
 The company have added 20 new clients with total quantum of 500 tonnes p.a.
Bloomberg CCLP IN Profitability will not get affected as this will procure small packs (high margin
NSE Code CCL business).
BSE Code 519600  EBIDTA for Q4FY19 de-grew by 24% YoY to `54 crs while for FY19 increased by
4% YoY. Gross margin grew by 680 bps to 45.4% YoYin Q4FY19.
Shareholding Pattern (%)  Employee expenses and other expenses increased by 6% & 30% YoY respectively.
Other expenses largely increased on account of selling and distribution expenses.
Promoters 45.28%
Depreciation decreased by 46% to `5 crs due to change in depreciation policy in
FIIs & DIIs 30.26% Switzerland. EBIDTA margin for Indian operationsexpanded by 20 bps to 18.7% in
Public & Others 24.46% Q4FY19.
 PAT for Q4FY19 de-grew by 24.5% YoY to `35.6crs. Finance cost increased by 24%
Comparison Chart YoY. On a standalone basis PAT grew by 111% to `49.3crs. in Q4FY19 on account
of dividend received from overseas subsidiary M/S Ngon Coffee Company Ltd.PAT
CCL Products Nifty 50
320 13000 for FY19 grew by 4.6% to `155crs.
300 12000  In Vietnam, sales declined by ~31% YoY. We believe better product mix and
280 11000
260 additional spray-dried capacity of 3500 ton at a cost of US$8mn by Q4FY20E could
240 10000 bring strong revenue and profitability in the region. The company expects capacity
220 9000
utilisation to reach at a level of 90% in FY20E for Vietnam.
200 8000
 The company is setting up new agglomeration and packing unit with a capacity of
May-18

Sep-18

May-19
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Oct-18
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Apr-19
Jun-18

Jan-19
Aug-18

5000 tons by next financial year for US$12 mn in India. The company expects ramp
up of freeze-dried plant from 2QFY20E. Management expects 50% capacity
utilisation for its new freeze-dried capacity in FY20E.
(` Crs)  Raw material impacted realisation. Prices of green coffee (70% of raw material) has
Financial declined 10-15% YoY in FY19. Prices are expected to be under pressure in FY20E as
FY19 FY20E FY21E well. Coffee producers have been facing tough business conditions over the past two
Summary
fiscal years. A bumper crop in Brazil, Indonesian and Vietnam was the main reason for
Net Sales 1081.4 1326.3 1520.1
the price fall.
Growth % -5.0% 22.6% 14.6%
EBITDA 248.4 311.3 363.2  The branded business reported sales of `80crs, of which Retail, APO and private
EBITDA Margin % 23.0% 23.5% 23.9% labels have contributed `35crs, `15 crs and `30crs respectively.
PAT 154.9 189.7 230.7  Currently branded coffee is available in 11 states with primary focus on Andhra
EPS (`) 11.6 14.3 17.3 Pradesh and Telangana. Going ahead, management will continue to focus on these
P/E(x) 18.4 15.2 states to increase its branded business.
 Ample global supplies have been piling pressure on world prices, cutting costs for
roasters. However, CCL is well positioned in the market due to its (1) Right market
collaboration (2) wider variety of products (3) in-house R&D.
 CCL has extended the credit period for its US clients, which led to increase in
receivables. The company is expanding aggressively its presence in US market to gain
market share.
 Chittoor Plant (Freeze Dried Coffee) with capacity of 5000 tonnes would commenceits
operation in April 2019. Initially capacity utilisation would be at 50%. The company
targeting new clients with larger volume.
 The management has changed its growth strategy, focusing more on volume growth,
Ashwini Sonawane branded business and better product mix to access new customers. The management
hasgiven15-20% sales/volume/bottom line growth guidance for FY20E on account of
Tel: +9122-4019 2956
value-add mix, the decline in raw material prices and sustainable volume growth
ashwinisonawane@way2wealth.com along with commissioning of Chittor plant (Freeze dried Coffee).

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 CCL Products (India) Ltd.
Result Update
May 30th, 2019

Risks

 Volatility in green coffee prices will impact realisation.

 Slowdown in demand for instant coffee from Europe and other countries.
 Retraction of order from clients.

Valuation & Outlook

The company’s focus on growing its presence in the domestic market with a strong brand
coupled new client addition and the new freeze-dried plant in India has led to a great
performance in the last two years. The company has lost a large client that used to
contributes ~5% to sales. However, the company remained confident about its profitability
with the addition of 20 new clients. The company has given 15-20% Sales/volume/PAT
growth for FY20. Change in growth strategy, focus on volume growth, branded business
and better product mix will aid margins and profitability in FY20. CCL is well poised for
the growth considering its Freeze-Dried capacity, good traction in branded business and
ramp up in Vietnam. We believe CCL has shown strength in a tough market scenario for
global instant coffee due to its strong relationships, R&D and product quality. Hence, we
believe new clients will add a premium offering from CCL in due course of time.
At CMP of `263/- the stock trades at 15.2x FY21E estimated EPS of `17.3/. We advise
investors with a long-term investment horizon to HOLD the stock.

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 CCL Products (India) Ltd.
Result Update
May 30th, 2019

Standalone Financials
(`Crs)
Q4FY19 Q4FY18 VAR [%] Q3FY19 VAR [%] FY19 FY18
Net Sales (Net Of Excise Duty) 195.8 224.8 -12.9% 181.0 8.2% 809.1 824.7
Other Operating Income 0.0 0.0 - 0.0 - 0.0 0.0
Total Operating Income 195.8 224.8 -12.9% 181.0 8.2% 809.1 824.7
Other Income 29.5 0.9 3255.7% 0.2 18356.3% 30.2 4.0
TOTAL INCOME 225.3 225.7 -0.2% 181.1 24.4% 839.3 828.7
Total Raw Material Cost 110.3 142.2 -22.4% 98.4 12.1% 459.5 497.3
Cost of Materials Consumed 94.3 141.6 -33.4% 101.5 -7.1% 459.5 514.0
Changes in Inventories 16.1 0.6 2622.0% -3.1 -624.8% 0.0 -16.8
Packing Materials Consumed - - 0.0 0.0
Total Raw Material Cost % to Sales 56.3% 63.3% 54.4% 56.8% 60.3%
Employee Expenses 10.4 10.4 0.4% 11.3 -8.1% 41.4 37.3
Employee Expenses % to Sales 5.3% 4.6% 6.3% 5.1% 4.5%
Stores, Power & Fuel Consumed 0.0 0.0 - 0.0 - 0.0 0.0
Power, Oil & Fuel % to Sales 0.0% 0.0% 0.0% 0.0% 0.0%
Other Expenses 38.5 30.5 25.9% 30.8 25.0% 136.7 125.5
Other Expenses % to Sales 19.6% 13.6% 17.0% 16.9% 15.2%
TOTAL EXPENDITURE 159.2 183.1 -13.1% 140.5 13.3% 637.6 660.0
EBITDA 36.6 41.7 -12.2% 40.5 -9.6% 171.6 164.7
EBITDA Margin % 18.7% 18.5% 22.4% 21.2% 20.0%
Finance Costs 2.5 1.8 41.0% 3.0 -15.5% 11.0 6.2
PBDT 63.6 40.8 56.0% 37.7 68.9% 190.8 162.5
Depreciation 3.1 2.9 7.3% 3.1 0.0% 12.2 11.2
PBT 60.6 37.9 59.7% 34.6 75.1% 178.6 151.2
Total Tax 11.2 14.5 -22.5% 10.8 4.4% 53.1 53.5
Income Tax 12.0 14.0 -14.5% 11.5 4.3% 52.5 52.5
Deferred Tax -0.8 0.5 -253.1% -0.7 2.7% 0.7 1.0
Tax Rate % 18.6% 38.3% 31.1% 29.8% 35.4%
Reported Profit After Tax 49.3 23.4 110.6% 23.8 107.0% 125.4 97.8
Extra-ordinary Items 0.0 0.0
Adjusted Profit After Extra-ordinary item 49.3 23.4 110.6% 23.8 107.0% 125.4 97.8

Basic:
EPS 3.7 1.8 110.6% 1.8 107.0% 9.4 7.3
Equity 26.6 26.6 26.6 26.6 26.6
Face Value 2.0 2.0 2.0 2.0 2.0

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 CCL Products (India) Ltd.
Result Update
May 30th, 2019

Consolidated Financials
(`Crs)
Q4FY19 Q4FY18 VAR [%] Q3FY19 VAR [%] FY19 FY18 VAR [%]
Net Sales (Net Of Excise Duty) 262.1 320.9 -18.3% 234.1 12.0% 1081.4 1138.0 -5.0%
Other Operating Income - 0.0 0.0
Total Operating Income 262.1 320.9 -18.3% 234.1 12.0% 1081.4 1138.0 -5.0%
Other Income 0.8 1.6 -54.0% 0.9 -17.6% 3.3 4.9 -31.1%
TOTAL INCOME 262.9 322.5 -18.5% 235.0 11.9% 1084.8 1142.9 -5.1%
Total Raw Material Cost 143.1 197.1 -27.4% 123.4 16.0% 597.3 690.6 -13.5%
Cost of Materials Consumed 117.0 189.4 -38.2% 137.1 -14.6% 601.7 719.5 -16.4%
Changes in Inventories 26.1 7.8 236.7% -13.6 -291.6% -4.4 -28.9 -84.8%
Packing Materials Consumed - - 0.0 0.0 -
Total Raw Material Cost % to Sales 54.6% 61.4% -11.1% 52.7% 3.6% 55.2% 60.7% -9.0%
Employee Expenses 14.7 13.9 6.0% 15.4 -4.1% 58.9 47.5 24.1%
Employee Expenses % to Sales 5.6% 4.3% 29.7% 6.6% -14.4% 5.5% 4.2% 30.6%
Stores, Power & Fuel Consumed - - 0.0 0.0 -
Power, Oil & Fuel % to Sales 0.0% 0.0% - 0.0% - 0.0% 0.0% -
Other Expenses 50.2 38.7 29.8% 41.0 22.5% 176.8 161.1 9.8%
Other Expenses % to Sales 19.2% 12.1% 58.9% 17.5% 9.4% 16.4% 14.2% 15.5%
TOTAL EXPENDITURE 208.1 249.7 -16.7% 179.8 15.7% 833.1 899.1 -7.3%
EBITDA 54.1 71.2 -24.0% 54.3 -0.4% 248.4 238.9 4.0%
EBITDA Margin % 20.6% 22.2% -7.0% 23.2% -11.1% 23.0% 21.0% 9.4%
Finance Costs 2.6 2.1 23.7% 3.0 -13.9% 11.3 7.8 44.6%
PBDT 52.2 70.7 -26.1% 52.2 0.1% 240.4 235.9 1.9%
Depreciation 4.7 8.7 -45.9% 8.8 -46.3% 31.7 34.1 -7.0%
PBT 47.5 62.0 -23.3% 43.4 9.5% 208.7 201.8 3.4%
Total Tax 11.9 14.7 -19.5% 10.8 10.0% 53.8 53.7 0.1%
Income Tax 12.8 14.3 -10.4% 11.5 11.2% 53.3 52.8 1.0%
Deferred Tax -0.9 0.4 -313.6% -0.7 28.8% 0.5 0.9 -50.0%
Tax Rate % 25.0% 23.8% 5.0% 24.8% 0.5% 25.8% 26.6% -3.2%
Reported Profit After Tax 35.6 47.2 -24.5% 32.6 9.3% 154.9 148.1 4.6%
Minority Interest After NP - - 0.0 0.0 -
Profit/Loss of Associate Company - - 0.0 0.0 -
Net Profit after Minority Interest & P/L
35.6 47.2 -24.5% 32.6 9.3% 154.9 148.1 4.6%
Asso.Co.
Extra-ordinary Items - - 0.0 0.0 -
Adjusted Profit After Extra-ordinary item 35.6 47.2 -24.5% 32.6 9.3% 154.9 148.1 4.6%
13.6% 14.7% 13.9% 14.3% 13.0%
Basic:
EPS 2.7 3.5 -24.5% 2.5 9.3% 11.6 11.1 4.6%
Equity 26.6 26.6 26.6 26.6 26.6
Face Value 2.0 2.0 2.0 2.0 2.0

Way2Wealth Brokers Pvt. Ltd. (CIN U67120KA2000PTC027628) SEBI Rgn. No. : INH200002739
No. 14, Frontline Granduer, Walton Road, Bangalore-560001; Website: www.way2wealth.com Email: research@way2wealth.com
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 CCL Products (India) Ltd.
Result Update
May 30th, 2019

Team

Analyst Designation Sector Email Telephone

Alok Ranjan Head – Research alokranjan@way2wealth.com +9122-6146 2902
Jayakanth Kasthuri Research Analyst Logistics & Capital Goods Jayakanthk@way2wealth.com +9122-6663 8956
Ashwini Sonawane Research Associate FMCG, Consumer Durables ashwinisonawane@way2wealth.com +9122-4019 2956
Tausif Shaikh Research Associate Pharma tausifshaikh@way2wealth.com +9122-6146 2974

Institutions Designation Email Telephone

Kaushal Jaini Vice President kaushaljaini@way2wealth.com +9122-40278919
Neelam Vivek Nagvekar Institutional Sales Trader neelamnagvekar@way2wealth.com +9122-2575 8931
Manisha Panchal Institutional Dealer manishapanchal@way2wealth.com +9122-40278984

Way2Wealth Brokers Pvt. Ltd. (CIN U67120KA2000PTC027628) SEBI Rgn. No. : INH200002739
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 CCL Products (India) Ltd.
Result Update
May 30th, 2019
Disclaimer
Analyst Certification:I, Ashwini Sonawane, the research analyst and author of this report, hereby certify that the views expressed in this
research report accurately reflect our personal views about the subject securities, issuers, products, sectors or industries. It is also certified
that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations
or views in this research. The analyst(s), principally responsible for the preparation of this research report, receives compensation based on
overall revenues of the company (Way2Wealth Brokers Private Limited, hereinafter referred to as Way2Wealth) and has taken reasonable care to
achieve and maintain independence and objectivity in making any recommendations.
It is confirmed that Ashwini Sonawane, the author of this report has not received any compensation from the companies mentioned in the report
in the preceding 12 months. Our research professionals are paid in part based on the profitability of Way2Wealth, which include earnings from
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Disclosure of Interest Statement in CCL Products (India) Ltd. as on May 30, 2018

Name of the Security CCL Products (India) Ltd.

Name of the analyst Ashwini Sonawane

Analysts’ ownership of any stock related to the information NIL

contained
Financial Interest
Analyst : No
Analyst’s Relative : Yes / No No
Analyst’s Associate/Firm : Yes/No No

Conflict of Interest No

Receipt of Compensation No
Way2Wealth ownership of any stock related to the information
NIL
contained
Broking relationship with company covered NIL

Investment Banking relationship with company covered NIL

This information is subject to change without any prior notice. Way2Wealth reserves at its absolute discretion the right to make or refrain from
making modifications and alterations to this statement from time to time. Nevertheless, Way2Wealth is committed to providing independent and
transparent recommendations to its clients, and would be happy to provide information in response to specific client queries.

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