BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Nirmal Bang Report
We believe that underlying demand for spray dried coffee continues to be strong and CCL Products India Ltd. The company is in a position to gain market share from the organised players and small local/regional companies.
Over the next couple of years, CCL Products would add ~85% of its existing capacity and the management maintains ~50% utilisation guidance for the new capacity in the first full year of operations.
Most importantly, this significant capacity addition is expected to be built with a relatively low capex since half of it is brownfield in nature.
While select investors have expressed concerns about CCL Products’ historical free cash flow trajectory, we believe that with this expansion, the company is expected to generate a cumulative FCF of Rs 5.9 billion over FY22-26E.
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