CCL Products Faces Financial Scrutiny Amidst Mixed Performance Metrics and High Leverage

Feb 06 2025 06:40 PM IST
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CCL Products (India) has recently adjusted its evaluation amid challenging financial performance for the quarter ending December 2024. Despite a solid annual growth rate in net sales and operating profit over five years, concerns arise from low return on capital employed and a high debt-equity ratio, indicating potential long-term growth issues.
CCL Products (India), a midcap player in the Tea/Coffee industry, has recently undergone an evaluation adjustment reflecting its current market dynamics. The company has reported a challenging financial performance for the quarter ending December 2024, with key metrics indicating a need for scrutiny. Over the past five years, net sales have shown an annual growth rate of 22.14%, while operating profit has increased at a rate of 14.44%. However, the return on capital employed (ROCE) has reached a low of 10.68%, raising concerns about long-term growth prospects.

Additionally, the company's debt-equity ratio stands at 1.09 times, marking a peak in its financial leverage. The operating profit to interest ratio has also dipped to 4.07 times, suggesting potential challenges in covering interest obligations. Despite these hurdles, CCL Products maintains a strong management efficiency with a ROCE of 14.70% and a favorable debt to EBITDA ratio of 2.11 times, indicating a solid ability to service its debt.

The technical trend for the stock has been sideways, reflecting a lack of clear price momentum. With high institutional holdings at 31.19%, the stock is trading at a discount compared to its historical valuations, presenting an intriguing scenario for stakeholders.

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