• CCL Products 3QFY20 result was all round beat the street estimates driven by superior India operations. Revenue grew 29% YoY while EBITDA/net profit surged +55%/+44% on YoY basis. EBITDA margin surged 460bps YoY to 27.8%

• The stronger than expected volume growth and increased contribution from high margin products like freeze dried coffee and lower coffee prices.

• Key highlights are CCLP achieved branded sales of INR0.65bn in 9MFY20, expected to touch INR1bn in FY20. The newly commissioned freeze dried plant achieved capacity utilization (C.U) of 75% in 3QFY20 and expected to reach annualized C.U of 55/75% for FY20/21 and looking for expansion in spray-dried capacity in Vietnam (3500MT) would start contributing from 2QFY21.

• The CCLP could post EBITDA/ PAT CAGR of 16%/17% over FY19-22 respectively, coupled with healthy free cash flow and steady return ratios. Current valuation of 11x FY22E P/E, a steep discount of 40%/20% to its 5yr/10yr avg P/E is unjustified and can consider CCLP as a strong re-rating candidate.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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