The stock currently trades at 22.5x FY19 EPS of Rs 11.64 and 18.7x FY20e EPS of Rs 13.97. Setting up agglomeration unit in India is aimed at enhanced value addition for agglomerated products generally command 4-5% higher margins compared to spray dried products.
Company being India’s largest manufacturer and exporter of instant coffee working with cost plus margin basis and having global reach in more than 85 countries and selling around 1000 different blends to customers.
Operating performance of CCL Products (India) or CCLP in 2QFY19 was ahead of our expectations. On a consolidated basis, revenues declined just 2% YoY, despite a strong base quarter and around 18% YoY decline in coffee prices.
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