FMCG Sector Midcap Stock Gets "Buy" Call, Share Can Surge 26%, Trading Near 52-Week High

Brokerage firm Nirmal Bang has assigned a "Buy" on CCL Products (India) Ltd., it is an FMCG sector Midcap stock. The brokerage has estimated a target price of Rs 700/share. It sees a potential upside of up to 26% considering the given target price. The company was established in the year 1994. It is engaged in the production, trading and distribution of Coffee. The Company has business operations mainly in India, Vietnam and Switzerland countries. It has a market capitalisation of Rs 7,412.32 crore.

CCL Products' Stock Outlook

The stock of CCL Products last traded at Rs 557.20 apiece on NSE, falling 2.10%. It recorded its 52 week low on 11 May 2022 at Rs 315.20 apiece, and 52 week high on 10 March 2023 at Rs 593. apiece, respectively.

The stock has given 4.3% positive return in 1 month and 5.13% in 3 months, respectively. It has given 46.94% positive return in 1 year. It gave a multibagger return of 192.95% in 3 years. It gave 91.91% positive return in 5 years.

Increased engagement with brands is positive, Buy for TP of Rs 700

Nirmal Bang said, "We came out positive from our recent management interaction along with the plant visits of CCL Products Ltd (CCLP) in India. Core B2B business is going strong, led by orders across key geographies, wallet share gains from existing clients, new client additions and continuous thrust on expanding product offerings. Repeat orders and new client additions are a function of successful replacement of other coffee processors as the overall global soluble coffee market continues to grow at 2-3% annually. In the company's Tirupati Unit (SEZ and EOU), there is further scope of expansion. The Duggirala unit is operating at optimum utilization."

It added, "Currently, CCLP is outsourcing a portion of export demand, which should be transferred to Vietnam as the new capacity is up and running. We believe this portion itself can contribute ~3-5% incremental volume growth FY24 onwards. We believe that underlying demand for Spray Dried (SD) coffee continues to be strong across geographies and CCLP is in a position to clock 60,000 tonnes volume by FY26-end, which should translate into ~Rs7.1bn EBITDA, implying a 4-year CAGR of ~21%. Earnings CAGR over the same period could be ~24% on account of lower ETR."

It further added, "CCLP continues to be our top idea and we maintain BUY on it with a revised target price (TP) of Rs700 (earlier Rs650) post rolling forward valuation to FY25E earnings. We are valuing CCLP at historical multiple; but, consistent earnings delivery could be a re-rating trigger for the company's B2B business, in our view."

Disclaimer

The stock has been picked from the brokerage report of Nirmal Bang. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.