Over 1400% return in 10 years! This multibagger has more room to rally

Shares of Hyderabad-based CCL Products (India) (CCLP) have delivered over 1,400 per cent returns to its shareholders in the last 10 years. Domestic brokerage Axis Securities, in its recent report, has maintained a bullish stance on the counter and believes that this wealth creator is well-placed to grow further.

It has a 'Buy' rating on the stock with a target price of Rs 560, signalling an upside of over 40 per cent. The company with a market capitalisation of more than Rs 5,300 crore as of 12 July had hit a 52-week high of Rs 514.90 on February 2, 2022.

The brokerage firm remains positive on CCL Products given its expertise in customized blends and cost-efficient business model. It noted that the company is the largest manufacturer and exporter of instant coffee. A doubling of Vietnam's capacity from the current 13,500 MT will lead to volume growth visibility for the next 2 years, it said, adding that capacity additions in value-added products, and foray into the high-margin branded retail business will work for the company.

Axis Securities highlighted that Vietnam's capacity will be enhanced from 13,500 tonnes to 30,000 tonnes and expected commercialisation by Q4FY23. The new capacity will be entirely spray-dried. The current capacity in Vietnam is working at optimum levels of (80-85 per cent).

"Russia contributed 20 per cent of the sales, which were impacted during the first 30 days of the war with the supply chain being completely disrupted. However, the situation has gradually improved and has revived back to 75-80 per cent normalcy. Moreover, the management stated that the company is in fact getting fresh enquiries from existing clients as South American countries are refusing to supply coffee to Russia under current geo-political tensions," it added.

CCL Products (India) reported a standalone profit of Rs 65.6 crore for the March quarter. The company had posted a profit of Rs 100 crore during the corresponding quarter of the previous financial year.

The company’s sales also dipped marginally to Rs 222 crore in the quarter ended March 2022 from Rs 225.73 crore during the previous quarter ended March 2021.

Promoters held 46.2 per cent stake in the company as of March 31, 2022, while FIIs owned 10.04 per cent and DIIs 17.56 per cent stakes.

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