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    CCL Products

    CCL
    Fast Moving Consumer Goods·6 Aug 2025
    Management Summary

    CCL Products reported a strong Q1 FY26 with record turnover exceeding ₹1,000 crores and healthy EBITDA growth. However, net profit was significantly impacted by higher interest and depreciation. The company highlighted robust performance in its domestic branded business and discussed strategies to navigate green coffee price volatility and tariff uncertainties, while also focusing on debt reduction.

    Highlights

    4
    • Achieved a record turnover of ₹1,058 crores in Q1 FY26, marking the first time exceeding ₹1,000 crores in a quarter, representing a 37% YoY growth.

    • EBITDA increased by 23% YoY to ₹161.43 crores, demonstrating strong operational performance.

    • The domestic branded products segment showed robust growth, contributing approximately ₹150 crores to the Q1 turnover.

    • Green coffee prices have softened by 20-30% in the last 2-3 months, which could lead to more stable pricing post-Vietnam crop and benefit working capital.

    Concerns

    3
    • PBT growth was limited to 8% and Net Profit growth to 1% due to higher interest and depreciation components.

    • Significant volatility in the green coffee market, with daily fluctuations, is making buyers tentative and leading to shorter-term contracts.

    • The current tariff landscape is in flux, creating uncertainty for market participants and potentially impacting sourcing strategies.

    What Changed2

    vs Q2 FY26

    Guidance items9 → 7 (-2)Risks discussed2 → 3 (+1)

    Key financials

    Single quarter

    05 metrics
    1. 01Revenue₹1,058 Cr+36.6%YoY
    2. 02EBITDA₹161.43 Cr+22.7%YoY
    3. 03PBT₹131.62 Cr+8%YoY
    4. 04Net Profit₹72.45 Cr+1%YoY
    5. 05Domestic Branded Revenue₹150 Cr

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Net ₹1,671 crores

    Guidance & targets

    7
    CategoryTargetPriority
    Volume
    Volume Growth
    15% to 20%
    High
    Profitability
    EBITDA Growth
    15% to 20%
    High
    Profitability
    EBITDA per kg
    ₹125 to ₹135
    Medium
    Revenue
    Branded Business Turnover
    ₹400 crores
    High
    Debt
    Net Debt Reduction
    ₹150 crores
    High
    Debt
    Net Debt
    ₹1,350 crores
    High
    Debt
    Net Debt
    ₹1,200 crores
    High

    Net Debt Reduction Progress

    Next quarter
    Current₹1,671 crores (as of June 30, 2025)
    Target₹1,521 crores (by Sep 30, 2025)

    Why it matters

    Consistent debt reduction is key to improving profitability by lowering interest expenses and strengthening the balance sheet.

    So the plan is to bring down the debt by around INR150 crores every quarter.

    How to verify

    capital_allocation.debt.net_debt

    Risks & concerns

    3
    RiskSeverity

    Green Coffee Price Volatility

    Significant daily ups and downs in green coffee prices are making buyers tentative and impacting long-term contract commitments.Management acknowledged

    high

    Uncertainty in Global Tariff Structures

    The market is in flux with varying tariff announcements (e.g., Brazil's 50% tariff), creating confusion and a 'wait and watch' approach among market participants.Management acknowledged

    medium

    Impact of Price Fluctuations on Client Commitment

    Both rising and declining coffee prices are not ideal; stable prices are preferred for clients to commit to longer contracts and higher volumes.Management acknowledged

    medium

    Q&A highlights

    8

    “And this volatility is simply because our selling price is related - we operate on a cost-plus model. So our selling price is related to coffee prices. And if the coffee prices fluctuate, EBITDA as a percentage to top line becomes very confusing. So the right way and that is what we have guided that the right way is to look at your EBITDA growth numbers.”

    Management clarified that investors should focus on absolute EBITDA growth (guided 15-20% YoY) rather than EBITDA as a percentage of revenue, which is distorted by fluctuating coffee prices in their cost-plus model.

    asked by Akash

    2 min read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.