CCL Products (India) Ltd's Q2FY19 consolidated net profit rises 41% yoy to Rs47cr

The company’s consolidated revenue in the period stood at Rs291cr, down 2% yoy and 1% qoq.

Oct 22, 2018 03:10 IST India Infoline Research Team

CCL Products (India) Ltd Q2FY19

Consolidated Results Q2FY19: (in Rs cr)

Q2FY19 YoY (%)
Revenue 290.76 [1.9]
EBITDA 76.27 32.5
EBITDA Margin (%) 26.2 681
Net Profit (adjusted) 47.18 41.1
***EBITDA margin change is bps

CCL Products (India) Ltd (CCL) reported a mixed set of consolidated numbers in Q2FY19. While revenue was below expectations, EBITDA and PAT surpassed the consensus estimates. Consolidated revenue in the quarter was 2% yoy lower (1% qoq lower) at Rs291cr. Revenue missed the consensus estimate of Rs312cr significantly. The lower revenue was also due to lower coffee prices, which depressed realizations. Consolidated EBITDA was 33% yoy higher (20% qoq higher) at Rs76cr. EBITDA was better than the consensus estimate of Rs68cr. EBITDA margin expanded 681bps yoy (expanded 460bps qoq) to 26.2%. Lower depreciation and lower tax rate pushed consolidated PAT 41% yoy higher (20% qoq higher) to Rs47cr. PAT, too, surpassed the street expectations of Rs42cr.

Other Highlights

  • Green coffee has been trending lower globally, which has resulted in lower realizations for CCL. We expect the trend to continue for some more quarters; hence, top-line may come under pressure going ahead. However, the management has already guided for 0-10% top-line growth for FY19. Hence, any growth will be purely volume-led.

Conference Call Highlights

  • Management attributed EBITDA growth in Q2FY19 mainly to: 1) higher proportion of small pack sales in domestic business (~30% in Q2FY19 vs. 20-25% in Q2FY18), which are usually more profitable than bulk sales due to higher value-addition; and 2) preponement of certain more profitable contracts from H2FY19 into Q2FY19.
  • Management revised its FY19 net profit growth guidance to 15-20% yoy (from 10-20% previously), while top-line guidance was also tweaked upward to 5-10% (from 0- 10% previously). The upward revision in guidance is due to higher contribution from value added products. Management also mentioned that the company is awaiting certain new contract wins in next 2-3 months, which, if they materialize, could drive net income growth closer to the higher end of the company’s guidance range.
  • On currency depreciation, management clarified that its COGS as well as revenues are denominated in USD. Hence, benefits from INR depreciation are applicable only below the gross margin line. Even here, the company may have to pass on some of these benefits if competitors do so. Although most of CCL’s competitors are located overseas, currencies in most of their respective home countries have also depreciated.
  • The company guided for FY19 capacity utilization in the range of 90- 95% for India business (largely stable yoy) and 75-80% for the Vietnam business (vs. 60-70% in FY18). It clarified that it has already completed its annual shutdown of 20 days during H1FY19.

Technical View:

CCL Products (India) Ltd is currently trading at Rs238.20, down 9.15 points, or 3.7%, from its previous close of Rs247.35 on the BSE.
The scrip opened at Rs244.40 and has touched a high and low of Rs255.30 and Rs238.15, respectively. So far, 2,89,791 (NSE+BSE) shares have been traded on the counter. The stock is currently trading above its 200-DMA.

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