CCL - CCL Products (India) Ltd. Share Price

In the earnings conference call for Q1 FY 2025-26, CCL Products (India) Limited's management provided a positive outlook, highlighting significant growth despite market volatility. Key financial metrics included a turnover of INR 1,058 crores, a 37% increase from INR 774.6 crores in the corresponding quarter the previous year. The EBITDA grew by 23% to INR 161.43 crores, while Profit Before Tax (PBT) increased by 8% to INR 131.62 crores. Net profit saw a modest growth of 1%, reaching INR 72.45 crores, impacted by higher interest and depreciation costs.

Management emphasized robust performance in the domestic market, achieving approximately INR 150 crores, with around INR 100 crores derived from brand and retail businesses. They indicated a continuous market share gain across multiple channels and geographies. On coffee prices, which have softened by 20-30% recently, management noted ongoing volatility, making buyers tentative. They cited a "wait and watch" period until the Vietnamese coffee harvest, set to begin in December, indicating that stable prices would benefit the market.

Looking ahead, management confirmed a volume and EBITDA growth guidance of 10%-20% for the upcoming years, emphasizing that they aim to maintain growth momentum despite current volatility. They also discussed a reduction in net debt, targeting INR 1,350 crores by December 2025 and INR 1,200 crores by March 2026, attributing this to improved cash flows and reduced working capital needs.

Overall, management's outlook is cautiously optimistic, with strategies in place to navigate challenges and capitalize on growth opportunities in both domestic and international markets.

Here are some major questions and answers from the Q&A section of the earnings transcript for CCL Products (India) Limited's Q1 FY 2025-26 conference call:

1. Question by Akash: "With coffee prices decreasing, your EBITDA will be the same, therefore, margins will increase. What is a stable number to look at regarding margins?"

   Answer: "You're correct, Akash. We operate on a cost-plus model. So, fluctuations in coffee prices create volatility in margins. Instead, focus on our EBITDA growth; we've maintained a year-on-year growth of 15%-20%. For Q1, our EBITDA growth is at 23%. This growth momentum reflects our underlying performance more clearly than margin fluctuations, influenced by product mix and client variables."

2. Question by Abneesh Roy: "With corrected international coffee prices and varying tariffs, what's the outlook for coffee pricing in India?"

   Answer: "That's a good point, Abneesh. While international prices have decreased, we work on a cost-plus model, so price corrections improve our holding costs but don't affect margins directly. Currently, both India and Vietnam enjoy favorable tariff conditions. Stability in prices is essential for securing long-term contracts with clients. This interim period until the Vietnam crop is critical for observing market trends."

3. Question by Abhishek Navalgund: "What are the utilization levels for the India and Vietnam SDC capacities?"

   Answer: "Utilization is challenging to specify due to staggered capacity introductions. Overall, we've doubled our capacity, with existing facilities running at full capacity and new capacities at 10-15% utilization. Thus, we estimate around 60% aggregate utilization across locations."

4. Question by Deepak: "What was the year-on-year volume growth for Q1?"

   Answer: "The volume growth was in the double digits, indicative of good progress despite fluctuating margins. This aligns well with our strategy, as our EBITDA growth of 23% reflects effective management even amidst market volatility."

5. Question by Vignesh Iyer: "How will the 50% tariff on Brazilian coffee affect competition and our market strategy?"

   Answer: "The tariff could disrupt Brazilian exports, allowing us potentially better opportunities in the U.S. market. While Brazilian beans might flow to Asia, we believe our logistical advantages from Vietnam mitigate their competitive edge in instant coffee within this region."

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