#EBITDA #GROWTH
Despite volatility in coffee prices, EBITDA increased by ~11% to โน445 cr in FY24. Further, during Q4 FY24, other expenses rose YoY because of increase in small packaged orders, leading to higher packaging overheads. Major expenses constituted cost of materials consumed 61%, employee benefit expenses 5% and other expenses 19% (largely towards power & fuel and packing materials). In H1 FY25, EBITDA rose by ~24% YoY to โน267 cr, largely driven by rising volumes and value accretive businesses.
Despite volatility in coffee prices, EBITDA increased by ~11% to โน445 cr in FY24. Further, during Q4 FY24, other expenses rose YoY because of increase in small packaged orders, leading to higher packaging overheads. Major expenses constituted cost of materials consumed 61%, employee benefit expenses 5% and other expenses 19% (largely towards power & fuel and packing materials). In H1 FY25, EBITDA rose by ~24% YoY to โน267 cr, largely driven by rising volumes and value accretive businesses.
โก3๐ฅ1๐1
#PAT #GROWTH
During FY24, PAT declined by ~12% YoY to โน250 cr, impacted largely due to higher interest cost and depreciation as compared to previous year. Finance cost increased significantly due to rising capex for their expansion project. In H1 FY25, PAT grew by ~20% YoY to โน145 cr. During the period, finance costs rose due to the ongoing projects which is expected to reduce once the two new projects are onboarded. Post commencement of its operations in Vietnam, CCL was granted a tax break (0% tax) for five years until the end of FY18 and post that, a tax exemption of 50% for the following nine years. However, this has now been converted to โno taxโ for the entire lifetime of the company if it meets stipulated conditions of minimum employment, environmental governance, etc.
During FY24, PAT declined by ~12% YoY to โน250 cr, impacted largely due to higher interest cost and depreciation as compared to previous year. Finance cost increased significantly due to rising capex for their expansion project. In H1 FY25, PAT grew by ~20% YoY to โน145 cr. During the period, finance costs rose due to the ongoing projects which is expected to reduce once the two new projects are onboarded. Post commencement of its operations in Vietnam, CCL was granted a tax break (0% tax) for five years until the end of FY18 and post that, a tax exemption of 50% for the following nine years. However, this has now been converted to โno taxโ for the entire lifetime of the company if it meets stipulated conditions of minimum employment, environmental governance, etc.
๐ฅ3๐1๐ซก1
#EBITDA #MARGIN
In FY24, EBITDA margin contracted by 252 bps YoY to 16.8%, led by contracting gross margins by 395 bps during the period and higher operating expenses. Since the company operates on a cost-plus model, EBITDA margin reduced despite an increase in revenue. Small packs yield higher margins, and the company plans to capitalise on that going forward. In H1 FY25, EBITDA margin expanded by 56 bps YoY to 17.7%, on account of certain higher value and margin accretive contracts. Going ahead, the company plans to focus towards scaling up high-margin branded retail business (Continental Coffee, Plant-based meat protein). Also, EBITDA margin for branded business is anticipated to improve in FY25 as compared to 5%-6% in FY24.
In FY24, EBITDA margin contracted by 252 bps YoY to 16.8%, led by contracting gross margins by 395 bps during the period and higher operating expenses. Since the company operates on a cost-plus model, EBITDA margin reduced despite an increase in revenue. Small packs yield higher margins, and the company plans to capitalise on that going forward. In H1 FY25, EBITDA margin expanded by 56 bps YoY to 17.7%, on account of certain higher value and margin accretive contracts. Going ahead, the company plans to focus towards scaling up high-margin branded retail business (Continental Coffee, Plant-based meat protein). Also, EBITDA margin for branded business is anticipated to improve in FY25 as compared to 5%-6% in FY24.
โก1๐1๐ฅ1๐1
#ROCE
CCL Products had a healthy ROCE of ~27% up to FY17. However, over the past years, the ROCE has been on a declining trend and for FY24, it stood at 12.4%. The company has witnessed different patterns in its ROCE over the years. During the expansion phase, wherein the company deploys capex, ROCE tends to reduce; however, it is at its peak level when the utilization is at a higher level. Therefore, being a B2B (business to business) model and considering the nature of its business, i.e., supplying coffee to the end customers, it would always be a capex heavy model during this cycle.
CCL Products had a healthy ROCE of ~27% up to FY17. However, over the past years, the ROCE has been on a declining trend and for FY24, it stood at 12.4%. The company has witnessed different patterns in its ROCE over the years. During the expansion phase, wherein the company deploys capex, ROCE tends to reduce; however, it is at its peak level when the utilization is at a higher level. Therefore, being a B2B (business to business) model and considering the nature of its business, i.e., supplying coffee to the end customers, it would always be a capex heavy model during this cycle.
๐4โก1๐ฅ1
#ROE
The company witnessed peak ROE in FY16; however, thereon it started falling. In FY24, ROE for the company witnessed a downward trend to 15.91%, due to declining net profit.
The company witnessed peak ROE in FY16; however, thereon it started falling. In FY24, ROE for the company witnessed a downward trend to 15.91%, due to declining net profit.
โก2๐ฅ1๐1
#SECTOR #POTENTIAL
โข Coffee Industry - With ~2.25 billion cups consumed worldwide daily, coffee ranks as the second most traded commodity worldwide. The sector is not only large but also exhibits continuous growth in both local currency values and volumes, making it an attractive category for investors. Additionally, coffee consumption tends to remain steady even during economic downturns, highlighting its resilience. โข Indian Coffee market - Indiaโs total instant coffee market stands at โน60 bn, with ~70% of the market in South India. The market is evolving rapidly, driven by a shift in consumer preferences and the rise of cafรฉ culture. Traditionally a tea-drinking nation, India is specialty coffee, the proliferation of branded cafes. โข Global โข Raw seeing rising coffee consumption, particularly among the younger generation in urban areas, largely fueled by the popularity of Coffee market - The global retail coffee market was estimated at $106 bn in 2023 and has grown at a CAGR of ~3% in the last 5 years. Moreover, the coffee market is split between the Roast & Ground (R&G) segment and the Instant Coffee Segment. The R&G segment is a much bigger segment, contributing ~68%, and instant coffee represents ~32% of the industry value. Regionally, European countries are the largest consumer of instant coffee, followed by Russia, the US, Japan and Asian countries. materials - The primary ingredient for producing instant coffee is green coffee beans. On an average, it takes ~1.6 kgs of green coffee beans to produce one kg of instant coffee. The global production of green coffee is primarily composed of Arabica beans (60%) and Robusta beans (40%). Brazil, Colombia, and Ethiopia are the top producers of Arabica green coffee, while Vietnam, Brazil, and Indonesia lead in Robusta green coffee production.
โข Coffee Industry - With ~2.25 billion cups consumed worldwide daily, coffee ranks as the second most traded commodity worldwide. The sector is not only large but also exhibits continuous growth in both local currency values and volumes, making it an attractive category for investors. Additionally, coffee consumption tends to remain steady even during economic downturns, highlighting its resilience. โข Indian Coffee market - Indiaโs total instant coffee market stands at โน60 bn, with ~70% of the market in South India. The market is evolving rapidly, driven by a shift in consumer preferences and the rise of cafรฉ culture. Traditionally a tea-drinking nation, India is specialty coffee, the proliferation of branded cafes. โข Global โข Raw seeing rising coffee consumption, particularly among the younger generation in urban areas, largely fueled by the popularity of Coffee market - The global retail coffee market was estimated at $106 bn in 2023 and has grown at a CAGR of ~3% in the last 5 years. Moreover, the coffee market is split between the Roast & Ground (R&G) segment and the Instant Coffee Segment. The R&G segment is a much bigger segment, contributing ~68%, and instant coffee represents ~32% of the industry value. Regionally, European countries are the largest consumer of instant coffee, followed by Russia, the US, Japan and Asian countries. materials - The primary ingredient for producing instant coffee is green coffee beans. On an average, it takes ~1.6 kgs of green coffee beans to produce one kg of instant coffee. The global production of green coffee is primarily composed of Arabica beans (60%) and Robusta beans (40%). Brazil, Colombia, and Ethiopia are the top producers of Arabica green coffee, while Vietnam, Brazil, and Indonesia lead in Robusta green coffee production.
๐3โค1โก1๐ฅ1๐1
#COMPANY #OUTLOOK
โข Overall growth & profitability - They expect growth to be largely driven by rising volumes and value accretive businesses which will also drive EBITDA growth for the company. CCL witnessed a high-single digit of ~10% volume growth YoY at a group level. Further, the company expects the volume growth to be in the range of ~10%-20% as the customers are placing orders with lower volumes to match market prices in the upcoming quarters. โข Domestic business โ The business has been witnessing good momentum. For FY25, they expect the branded business to record an exit-revenue of ~โน300 cr. The company has been taking more price increases than price cuts towards the segment. โข Indian year and 80% in the third year of operations. โข Vietnam operations - They expect the Indian plant capacity addition to commence operations in the ongoing quarter (Q3 FY25) as major trials are through. They expect utilizations to kick in as per their thumb rule which is 30% in the first year, 60% in the second operations - Given the trials and matching of blends takes time, the proposed capacity addition (~5,500-6,000 MT) is expected to commercialize in Q3 FY25. Generally, the thumb rule for FD hovers around in the range of ~30%-35%; however, it expects the same to be in the range of ~40%-45% in its first year of operations. โข The company has acquired several brands from the Lofbergs Group of Denmark, including Percol, Rocket Fuel, Plantation Wharf, and The London Blend. These brands are owned by Food Brands Group, a subsidiary of Lofbergs Group. The goal is to utilize their CASE STUDY expertise and resources to scale the acquired brand into a โน150 cr business within the next 3-4 years
โข Overall growth & profitability - They expect growth to be largely driven by rising volumes and value accretive businesses which will also drive EBITDA growth for the company. CCL witnessed a high-single digit of ~10% volume growth YoY at a group level. Further, the company expects the volume growth to be in the range of ~10%-20% as the customers are placing orders with lower volumes to match market prices in the upcoming quarters. โข Domestic business โ The business has been witnessing good momentum. For FY25, they expect the branded business to record an exit-revenue of ~โน300 cr. The company has been taking more price increases than price cuts towards the segment. โข Indian year and 80% in the third year of operations. โข Vietnam operations - They expect the Indian plant capacity addition to commence operations in the ongoing quarter (Q3 FY25) as major trials are through. They expect utilizations to kick in as per their thumb rule which is 30% in the first year, 60% in the second operations - Given the trials and matching of blends takes time, the proposed capacity addition (~5,500-6,000 MT) is expected to commercialize in Q3 FY25. Generally, the thumb rule for FD hovers around in the range of ~30%-35%; however, it expects the same to be in the range of ~40%-45% in its first year of operations. โข The company has acquired several brands from the Lofbergs Group of Denmark, including Percol, Rocket Fuel, Plantation Wharf, and The London Blend. These brands are owned by Food Brands Group, a subsidiary of Lofbergs Group. The goal is to utilize their CASE STUDY expertise and resources to scale the acquired brand into a โน150 cr business within the next 3-4 years
๐5๐3โค1๐ฅ1๐1๐ซก1
CCL PRODUCTS LIMITED 500-620
Expected level 800
Support 400
Expected level 800
Support 400
๐ฅ15โค1โก1๐1
Godrej Properties Limited details report
Godrej PropertiesGodrej Limited is the real estate development arm of Godrej Group, which was started in 1897 and the company was established in 1990. It is engaged primarily in construction and real estate development. It focuses on developing residential, commercial and township projects. The company is headquartered in Mumbai and is present in 11 cities in the country. The company maintains an asset light model through joint development and joint venture projects. As of March 31, 2024, the company had 102 active and upcoming projects with a combined developable area of ~223 million square feet with a focus on four core region- Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Pune and Bangalore. It has delivered ~47 million sq ft of real estate since FY18. It has added 66 residential projects with ~136 million sq ft of saleable area since FY18. It has added 10 new residential projects with a saleable area of ~18.9 million sq. ft. and with an estimated booking value of ~โน21,225 crore in FY24. It entered Hyderabad market with 2 land deals with estimated booking value of ~โน5,000 crore. They have ventured into hospitality development via Taj The Trees at Vikhroli (151 keys). The company recognizes revenue upon transfer of control of promised products to customer in an amount that reflects the consideration which the group expects to receive in exchange for those products.
Godrej PropertiesGodrej Limited is the real estate development arm of Godrej Group, which was started in 1897 and the company was established in 1990. It is engaged primarily in construction and real estate development. It focuses on developing residential, commercial and township projects. The company is headquartered in Mumbai and is present in 11 cities in the country. The company maintains an asset light model through joint development and joint venture projects. As of March 31, 2024, the company had 102 active and upcoming projects with a combined developable area of ~223 million square feet with a focus on four core region- Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Pune and Bangalore. It has delivered ~47 million sq ft of real estate since FY18. It has added 66 residential projects with ~136 million sq ft of saleable area since FY18. It has added 10 new residential projects with a saleable area of ~18.9 million sq. ft. and with an estimated booking value of ~โน21,225 crore in FY24. It entered Hyderabad market with 2 land deals with estimated booking value of ~โน5,000 crore. They have ventured into hospitality development via Taj The Trees at Vikhroli (151 keys). The company recognizes revenue upon transfer of control of promised products to customer in an amount that reflects the consideration which the group expects to receive in exchange for those products.
โก1๐ฅ1๐1๐ซก1