Detailed Narrative
Q1 FY26 Performance Overview
CCL Products achieved a record turnover of ₹1,058 crores in Q1 FY26, marking the first time the company has surpassed ₹1,000 crores in a single quarter, representing a 37% year-on-year growth. EBITDA for the quarter stood at ₹161.43 crores, a 23% increase from the previous year. However, PBT grew by only 8% to ₹131.62 crores, and Net Profit saw a modest 1% growth to ₹72.45 crores, primarily impacted by higher interest and depreciation expenses.
Green Coffee Market Dynamics
The green coffee market has experienced significant volatility, with prices softening by 20-30% in the last 2-3 months, yet daily fluctuations of up to $100 persist. This volatility is making buyers tentative and leading to shorter-term contracts (3-4 months instead of 12 months). Management views the period between the Brazil crop harvest and the upcoming Vietnam crop (December) as a critical 'wait and watch' phase for price stabilization, which would be beneficial for long-term client commitments.
Branded Business Expansion (Domestic & International)
The domestic branded products segment demonstrated strong momentum, contributing approximately ₹150 crores to the Q1 turnover, with ₹100 crores specifically from brand and retail business. The company is aggressively expanding its Percol brand in the UK, aiming to double its value from last year's ₹15-16 crores. In India, Percol is being positioned as a premium offering to capture the niche segment, with initial sales across almost all platforms and a focus on modern retail outlets.
Capacity Utilization and Expansion
CCL Products reported an aggregate capacity utilization of 60% across its India and Vietnam SDC plants. While existing capacities are running at full utilization, the newer capacities, commissioned in the last quarter of the previous year, are currently operating at 10-15% utilization. Management expects to achieve similar utilization levels across both locations by the year-end as new capacities ramp up.
Debt Management and Interest Costs
The company's net debt stood at ₹1,671 crores as of June 30, 2025, down from ₹1,812 crores at March 31, 2025, and ₹1,974 crores in December 2024. Management confirmed that interest costs are at peak levels but anticipate relief from next quarter onwards due to ongoing debt reduction efforts (targeting ₹150 crores reduction per quarter) and lower working capital requirements. The goal is to reduce net debt to ₹1,350 crores by December 2025 and ₹1,200 crores by March 2026.
Tariff Landscape and Sourcing Flexibility
The global tariff landscape, particularly regarding Brazil's 50% tariff, is creating flux and uncertainty. However, CCL Products benefits from its manufacturing presence in both India and Vietnam, allowing it to source green coffee from across the world. This flexibility positions the company advantageously, as it can adapt to changing tariff structures and secure competitive pricing, whether Brazil coffee is rerouted or Vietnam coffee prices fluctuate.