CCL Products Limited Q1 FY27 Earnings Call Summary

Event Participants

Executives

5 B. Mohan Krishna, Bethany Adase Raji, Challa Srishant, Praveen Jaipuriar, Sridevi Dasari

Analysts

13 Abhishek Mattoo, Akhil Parekh, Avnish Roy, Bhavya Sonawala, Deepak Ajmera, Dipak Saha, Divyanshi Jain, Hiren Desai, Naveen, Nisarg Swaminathan, Palak Jain, Shirish Pardeshi, Shubhi Gupta

Financials & KPIs

Geographic & Segment Commentary

• Domestic Branded Business (India): Q1 gross turnover of ₹180 crores, with branded at ~₹125-130 crores growing ~26% YoY. Consistent market share gains—6%+ urban share in South India, double-digit at Reliance/DMart, high single digits in quick commerce. Management guided FY27 branded revenue of ₹550-600 crores on 25%-30% volume growth, with EBITDA margins held at 5%-6% and profits reinvested for aggressive expansion into North and West markets.
• Export B2B Business: Q1 volume growth of ~20% on a cost-plus model; blended EBITDA per kg of ~₹140 sustained. Mix improvement continues through higher freeze-dried share, direct client engagement, and small-pack sales. Aggregate utilization of 65%-70%, with freeze-dried running higher than spray-dried.
• Vietnam Operations: Rated capacity 36,000 tons with utilization similar to India (~65%-70%). Brownfield expansion capability exists; El Niño impact on Vietnam Robusta crop monitored but not expected to disrupt supply flows.
• International B2C (Percol UK & New Markets): Percol UK turned around in FY26 with ₹26-27 crores revenue; distributor discussions underway in the US (Percol plus Indian brands for the diaspora) and Middle East, with some agreements expected to conclude within months.
• Snacks (Malgudi): Broader rollout commenced ~5-6 days before the call with new SKUs (banana chips added to Chikodi/Murukku); FY27 revenue expectation of ~₹2 crores, with next-quarter feedback to determine acceleration.

Company-Specific & Strategic Commentary

• Balance Sheet Deleveraging: Net debt reduced to ₹963 crores from a ₹1,950 crore peak (Dec 2024) without equity dilution, asset sales, or pausing growth. FY26 operating cash flow surged to ₹858 crores from ₹290 crores, and working capital days fell by 80 days to 166—delivered through a working-capital- and cash-flow-centric operating strategy.
• Capacity & Expansion Strategy: No major capacity CapEx planned for the next two years; FY27 CapEx of ₹25-50 crores for maintenance/upgradation only. Brownfield additions in India and Vietnam take 9-12 months—planning starts at 75% utilization, capacity needed at 85-90%. Freeze-dried expansion under evaluation given high CapEx and 24/7 operating requirements. At 77,000 tons, CCL holds 10%-11% of the global contract market, with 100,000-120,000 tons achievable.
• Domestic Brand Equity & Distribution: Trade margins now at par with large FMCG companies (retailer margin ~10%, distributor 5%-6%); 70% of branded business is cash-and-carry, reflecting brand pull. Pricing at par or higher than category leaders at select counters.
• International B2C Expansion: Building Percol and other acquired brands rather than actively pursuing acquisitions; US and Middle East launches in progress. Open to selective, reasonably priced acquisitions that can leverage the omnichannel distribution network.
• Product Diversification (Snacks): Malgudi snacks portfolio expanded with new products in select geographies; early-stage revenue (~₹2 crores FY27), next quarter will inform scale-up.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Volume Growth & FY27 Guidance

• Question: Can 15% volume growth sustain given coffee price volatility? Does rupee depreciation flow into margins? (Avnish Roy - Nomura)
• Answer: EBITDA growth follows volume growth under the cost-plus model; 15% guidance is maintained but not upgraded despite Q1's 20%, given market wait-and-watch from price volatility. The company is naturally hedged (large imports vs exports) with forex policies in place; only the residual import-export price differential impacts margins. (Praveen Jaipuriar)

El Niño & Supply-Side Risk

• Question: Could El Niño damage Vietnam's crop and create sourcing challenges? (Avnish Roy - Nomura)
• Answer: Robusta is a sturdier coffee type; even severe Brazil frost years have not disrupted supply flows. Volatility is driven by speculative interest in the world's second-most-traded commodity, not physical shortages. (Praveen Jaipuriar)

Capacity Utilization & Product Mix

• Question: What is the spray/freeze-dried volume split and utilization level? (Shirish Pardeshi - Motilal Oswal)
• Answer: Split not disclosed; aggregate utilization is 65%-70% with freeze-dried running higher, and Vietnam similar to India. Spray volumes remain larger but freeze-dried proportion improved YoY; blended EBITDA per kg of ~₹140 should be sustained through the year. (Praveen Jaipuriar)

Branded Business Scale, Market Share & Profitability

• Question: At what scale will the branded business turn PAT-positive? What is market share by channel? (Shirish Pardeshi; Akhil Parekh - 361 Capital)
• Answer: Branded business is already EBITDA-positive at 5%-6%; profits are deliberately reinvested for aggressive growth rather than milking. FY27 branded revenue guidance is ₹550-600 crores; South India urban market share crossed 6%, Reliance/DMart are double-digit, and quick commerce is high single digits approaching double digits. (Praveen Jaipuriar)

Capacity Expansion & Timing

• Question: At 15% volume growth for two years, utilization exceeds 95%; will growth be handicapped beyond FY28? (Nisarg Swaminathan - Spark Capital)
• Answer: Capacity has never hindered growth—during COVID, CCL bought external capacity when construction was impossible. Planning starts at 75% utilization; new capacity is needed at 85%-90%. Brownfield additions in India/Vietnam take 9-12 months with land and civil works already in place. (Praveen Jaipuriar)

EBITDA per kg Sustainability, Inflation & Peer Comparison

• Question: Is Q1 EBITDA per kg seasonally lower? Shouldn't it rise 3%-4% with inflation? Why does a peer report ₹160-170/kg vs CCL's ~₹137? (Nisarg Swaminathan; Hiren Desai - Individual Investor; Divyanshi Jain - Bir Growth Fund)
• Answer: No designed seasonality—the Q1 pattern is coincidental, and EBITDA per kg does not correlate with coffee prices. Inflation is passed through the cost-plus model; improvement from ₹125-130 to ₹135-140 came from freeze-dried mix and small packs, with sustainment (not further improvement) guided for FY27. Declined to comment on peer's profile—CCL prioritizes sustainable, compliance-driven growth with a different customer/product mix. (Praveen Jaipuriar)

Balance Sheet, Working Capital & Capital Deployment

• Question: What is the inventory/working capital position, debt repayment schedule, and is ₹858 crores of FY26 cash flow sustainable? (Abhishek Mattoo - Systematix; Palak Jain - Passion Research; Dipak Saha - Ashika)
• Answer: Inventory held at 2.5-3 months of green coffee. Net debt ₹963 crores; gross debt ₹1,268 crores (term loan ₹517 crores + working capital ₹761 crores). Term loan repayments: ₹140 crores in remaining FY27, ₹200 crores in FY28, balance ~₹160 crores by end-2028; gross debt target ~₹1,000 crores, net debt ~₹800 crores. FY26's ₹858 crores included a multi-year working capital correction and is not repeatable—normal expectation is converting a portion of PAT into cash flow; open to selective acquisitions leveraging omnichannel distribution without expensive deals. (CFO Bethany Adase Raji; Praveen Jaipuriar)

Standalone vs Consolidated Performance

• Question: Standalone growth and margins look muted vs consolidated—is there a structural issue? (Hiren Desai - Individual Investor)
• Answer: No structural issue; standalone bore Q1's logistics and packaging cost increases on India small packs, plus a high base. QoQ performance is in line with Q4 FY26. Parent capacity has been constant for 10+ years—all expansions flow through subsidiaries, which will drive future growth. (Praveen Jaipuriar; CFO)

Trade Terms & Brand Equity

• Question: Are you negotiating better take rates (lower discounts/commissions) in mature markets like Telangana/Andhra? (Dipak Saha - Ashika)
• Answer: Supply-chain margins are at par with large FMCG companies (retailer margin 10%, distributor 5%-6%). 70% of branded business is cash-and-carry—a strong indicator of brand pull; pricing is at par or higher than leaders at some counters. (Praveen Jaipuriar)

Snacks & International B2C Expansion

• Question: What is the Malgudi snacks rollout status and Percol's international progress? Are acquisitions being considered? (Shubhi Gupta - Trinetra; Naveen - ithought PMS; Bhavya Sonawala - Samaasa Capital)
• Answer: Snacks broad launch just began with added SKUs (banana chips); ~₹2 crores FY27 revenue expected, with next-quarter feedback informing scale-up. Percol UK turned around at ₹26-27 crores in FY26; US and Middle East distributor discussions in progress with deals expected in months. Not actively pursuing acquisitions—building Percol and other acquired brands first. (Praveen Jaipuriar)

Key Takeaway

CCL Products opened FY27 with revenue of ₹1,203.59 crores (+13.76% YoY) on ~20% volume growth, EBITDA of ₹196.69 crores (+21.84%), and net profit of ₹116.87 crores (+61.31%), with EBITDA per kg at ~₹140. Net debt fell to ₹963 crores from ₹1,073 crores in March 2026, extending FY26's deleveraging that generated ₹858 crores in operating cash flow and cut working capital days by 80. Management held FY27 volume growth guidance at 15%—not upgrading despite Q1 strength—and guided branded domestic revenue of ₹550-600 crores on 25%-30% growth. At 65%-70% utilization, capacity headroom covers two years; brownfield additions can follow in 9-12 months if needed. Watch items: El Niño/Vietnam crop risk, Middle East logistics costs, the path to ~₹1,000 crores gross debt, and EBITDA per kg sustainability.