CCL Products India - Another Strong Quarter; Outlook Upbeat; Result Update Q3FY15 :: Edelweiss, report

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CCL Products India (CCL) reported robust 21.7%, 20.1% and 51.8% YoY growth in consolidated sales, EBITDA and PAT, respectively. However, all the above numbers belied our estimates owing to lower-than-expected standalone sales. Key positives were: (1) newly commissioned Vietnam facility ramp up on track primarily driven by volumes; (2) Continental brand is doing well; and (3) gross debt down INR0.46bn QoQ. 20bps YoY dip in consolidated EBITDA margin was key negative. However, the fall was owing to a few one-off items. Management maintained FY15 volume guidance of 20,000MT, predominantly driven by Vietnam capacity ramp up. A resilient business model, capacity augmentation in Vietnam and sharpening brand focus in India place CCL in a sweet spot to post sales and PAT CAGR of 24.2% and 48.6%, respectively, over FY14-17E. RoE will improve from 20.4% in FY14 to 34.8% in FY17E.

Strengthening Vietnam fuels surge

CCL`s consolidated revenue grew 21.7% YoY primarily driven by standalone and subsidiaries revenue growth of 3.9% and 109.2% YoY, respectively. Contribution of the newly commissioned Vietnam plant (since Q3FY14) led to robust growth in revenue of subsidiaries. Consolidated EBITDA margin was impacted by: (1) MTM forex loss of INR25mn; (2) donation of INR20mn for hudhud cyclone to AP Chief Minister Relief Fund; and (3) selling expenses higher by INR15mn. Despite these, consolidated EBITDA surged 20.1% YoY to INR0.46bn (standalone: INR0.33bn and subsidiaries:  INR0.13bn). PAT stood at INR0.26bn versus our INR0.29bn estimate.

Key highlights

Management maintained FY15 volume guidance of 20,000MT (standalone 15000MT, Vietnam 5000MT). India capacity expansion from 15000MT to 20000MT expected to be commissioned in H1FY16.

LINK

https://www.edelweiss.in/research/CCL-Products-India--Another-Strong-Quarter;-Outlook-Upbeat;-Result-Update-Q3FY15/28066.html