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.
Systematix Research Report
CCL Products India Ltd.’s stock has underperformed, post what we thought was a reasonable set of Q1 result and strong outlook commentary by the management.
Concerns surrounding sharp dip in margins and significantly higher working capital requirements that could be a drag on return ratios are overdone, in our view.
Q1 revenue growth of 56% YoY which translated into mere 23% Ebitda growth, and continued margin pressure since the pandemic, have been key talking points.
Firstly, what needs to be understood is that CCL Products works on a cost-plus model, and could thus see a dip in percentage margins in an inflationary raw material price environment and vice versa.
Therefore, a better way to evaluate its performance is to compare its volume and Ebitda growth, which are exactly in line.
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