CCL Products (India) Limited (519600) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the CCL Products India Limited Q2 FY '27 Earnings Call hosted by Ashika Institutional Equities. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference call over to Mr. Dipak Saha from Ashika Institutional Equities. Thank you, and over to you sir.

Thanks, Ekra. Good morning, everyone. On behalf of Ashika Solution Equity, it is indeed a great pleasure to host the Q2 FY '27 earnings call of CCL Products Limited. Joining us today to discuss the earnings call for the quarter ended 30th September 2026 are Mr. Praveen Jaipuriar, Chief Executive Officer; Mr. Chaithanya Agasthyaraju, Chief Financial Officer; Mr. Sridevi Dasari, Company Secretary and Compliance Officer. We thank the management for giving this opportunity to host this call. I would now like to hand over the call to Praveen for his opening remarks, post which we'll open the floor for Q&A. Thank you, and over to you, Praveen.

Yes. Thank you, Dipak, and thanks for Ashika Securities team and Nika for hosting us in this call. Good morning, everyone. I welcome you all to the second conference call of '26'27. Now let me give a brief overview of the company's performance for the quarter and the half year ended September 30, 2026. The group has achieved a turnover of INR 1,215.99 crores for the second quarter as compared to INR 1,128.1 crores for the corresponding quarter of the previous year, achieving a value growth of 7.8% on the back of a double-digit volume growth. The value growth because of the green post price is coming down, the value growth trails the volume growth, which stands at double digit. The EBITDA stands at INR 217.3 crores as against INR 198.6 crores, which is a growth of 9.5% while the profit before tax is INR 350.86 crores, growing at 18.7% and the net profit stands at INR 130 crores, with a growth of almost 9%. As far as H1 is concerned, the group has achieved a turnover of INR 2,419.58 crores as compared to INR 2,816.5 crores, which is a growth of approximately 11.6%. The EBITDA stands at INR 414 crores as against INR 350 crores, which is a growth of almost 15%. And the PBT, which is at INR 279.8 crores is growing at 26.48%. And the net profit, which is at INR 246.6 crores for the first half is growing at 42%. The domestic business has achieved a gross turnover of INR 210 crores this quarter. Out of which, the brand sales is approximately INR 140 crores. The good part is that the growth momentum for the branded business continues, and we are growing at 25%. And we look forward to maintain this kind of growth momentum going forward as well. As far as the green coffee prices are concerned, while it is still fluctuating, but has been range bound in the region of $3,400 to $3,800 per listing per tonne. And the Vietnam crop, which is slated to come around November, December time is the time which will decide the future price trends for coffee. But the good thing is that even before the crop, the prices have held on to these levels, which is a good sign. The order position for Q3 and Q4 looks robust, and we expect to end the year exactly as per the guidance that we had given at the start of the year, which was around 15% volume growth. and a similar EBITDA growth as well. That is a brief note from our side. Now I open the floor for questions.

[Operator Instructions] The first question is from the line of Shirish Pardeshi from Motilal Oswal Financial Services Limited.

Praveen, starting with the DD volume growth that you have stated. Is it significantly higher than 15%? Or is it in the range of 10% to 15%?

No, it's in the range of 10% to 15%. And -- yes, in the range of 10% to 15%.

Okay. So 1 follow-up here. I think we have been seeing coffee prices is declining and the customers are also not stocking up. So is the inventory level, I would assume that inventory level would have normalized now and the order book growth looks very strong at this time because copper prices might further decline or remain stable?

So Shirish, there are 2 views here. One is that the midstream was that every time before the crop, the generally, the profit prices tend to increase because there is a lack of availability of coffee before the crop. But this time, it has -- as I was telling you in the opening remarks, it has been range bound. So while it is fluctuating every day, we see some $50, $100 of ups and downs that happen on a daily basis. But the good thing is that it is not broken away from the 3,700, 3,800 levels. Now we are expecting the crop to come by end of November, December. While there are news of MVNO and some pockets surges well. So there are some ticking reports that is coming from the market, but the fact that the pre-harvest prices are good, we -- there is an expectation that there could be a further reduction. So during this time, what happens is that the customers also wait for that direction to evolve by November, December. And every year, we see that November, December is the time we start getting more contracts into the order book. So generally, and same is the case when during June and July when the Brazil crop comes in. So I think that's how the things are. But as far as we are concerned, as I was telling that the quarter 3, quarter 4 order book looks robust, and we are well on track to get that 15% volume growth for the year. But let's say, some additions happen, then we'll keep updating you on that front as well.

Okay. No, I was just trying to check, is there any detraction between it FD and spread like our [indiscernible].

So FD, now what is that -- of course, 2 things, Shirish, our utilization as much better the demand in the world market has been better than the SG demand. But as far as our proportions are concerned, it is very much the same as what we have seen in the last 2, 3 quarters, largely also because by this time last year, second quarter onwards, this whole Vietnam FD capacity was in play, and therefore, a lot of these sales of MDA is also building the base itself. So we didn't see much of a proportion. But having said so, we see that there is, as of now, at least, a better demand for FD worldwide.

Okay. And just last question. I could say there is a lot of spans across media channels. So is that -- if you can give me some color on how it is backing the revenue would end up in terms of our brand sales and the DD institution?

So brand, Shirish, I was mentioning that we are growing last year because of a lot of price increases, we also got value growth, but this 25% is backed completely by volume growth in the domestic market. So we are going very well and the best part is that the growth is coming from all channels, which is GT, MT, comm, everything put together. So there has been an all around effort. And in India, there is a little bit of a skew, especially in the nonstrong coffee markets in the winter season and the festive season. So we are doing -- we are also gearing up for that, putting up a lot of efforts, both in terms of ATL and BTL during this. So we hope to continue the momentum on the branded side as well.

Okay. So I was just more interested in knowing, have we assessed any prices?

Sorry, I think your voice is breaking.

Have we adjusted the prices because of lower [indiscernible]?

[indiscernible] in the domestic market, there are SKUs where we had to drop prices. But the good thing is that we did not have much of an impact because in some SKUs, we kept the prices at the similar levels also. Last year, if you remember, September, I think it was 20th September or so when the GST cuts were announced. So the whole category and the whole industry has taken price dropped so did we. But there are certain SKUs post that, we also -- because of intermittently coffee prices and the energy costs have increased, so we have taken some pricing. So it's a big pack where there were price drops and there was also cases where there were price increases as well.

The next question is from the line of Vivek Ganguly from TCG AMC.

Can you just give an updated number on what the date right now is and what is the rate of interest?

I'll just asked CFO to chip in here.

Yes. The gross debt asset 30th September is INR 1,192 crores. Net debt is around INR 742 crores.

And what is the rate of interest?

Sorry?

Rate of interest.

Rate of interest. The rate of interest have slightly gone up over the last 1 quarter or so. The average rate would still grow between 7% to 7.5%.

Okay. About 7.25%.

You can take it 7.25% as of now. Depending on where the loan is taken price.

And you had given an indication that by the year-end, your debt would be in this INR 1,100 is range. So given the are you likely to exceed that and get to 3-digit numbers?

We still maintain the guidance that we have given. Our initial guidance was that we'll maintain debt between INR 1,000 crores to INR 1,200 crores of gross debt and net debt around INR 800 crores, given that what we have had is a procuring season because of the Vietnam -- what we have had is the Vietnam harvesting season. So there is a significant procurement on working capital may slightly go up. And therefore, we intend to maintain the guidance that we've already given.

Next question is from the line of Abhishek Navalgund from Nirmal Bang Institutional Equities.

The first question is on EBITDA growth. So I think after 9 quarters back to back where in our EBITDA growth has been consistently ahead of grossing as well as volume growth. We have 8% kind of a growth quarter. So first, is there any one-off in the other expenses, particularly in 2Q?

Abhishek, not significantly. If you see the volume growth, as I was saying between 10% to 15%, but with ties around 10%. And so there is also, as I was explaining all this while we also are getting a little benefit of our proportion change because see dike demand was ahead of spread right now. There's a lot of noise coming, Abhishek, from your end. Or I don't know from where. Are you able to hear me?

Yes.

so what I was selling Abhisek, is that -- so all this while we are also getting that benefit of a better proportion and all that, which now is in the base itself. So this means meant that your EBITDA and the volumes will kind of move together. So yes, there is a little bit of a here. But these are -- as I've been always telling that in a quarter, you will see last quarter, we saw a little higher growth of EBITDA than the volume. This quarter, a little low, and therefore, it will all settle down to a long-term guidance that we had given of 15% or so. And that is very much on the cards, and that is where we are negated towards.

So my only question was basically, last year, we have seen a significant increase in per kg EBITDA also. So the impression it was given was maybe we'll continue with that guidance. I mean, in terms of per KG, but this time, even in 1H, if I see our gross office growth is significantly ahead of our volume growth. So we were under the impression that at the gross profit level, our mix is still improving. So maybe that's why my question was whether the absolute EBITDA growth can be slightly ahead of volume growth or it will be exactly in line with like 15%, like you're saying?

So mostly in line, Abhishek, there could be a little at the end of the year because there is not only 1 thing that will play in terms of how the retail pan out, apart from proportions. There are many other aspects that we come into play. So it could be a couple of percentages higher also. I'm not denying that, but our guidance remains that both will move in tandem with each other. And I invite you to remember, I told is something that once the basis are normally of the same proportion of the [indiscernible] very unlikely that it is significantly [indiscernible] and that's why we extended this year will be 15 and 16 type of growth. And that is what we are likely to end the year.

Sure, sure. And last question is on debt part. We have already seen a significant amount of debt reduction in the first half itself. So are we still on track in terms of the INR 4 billion debt reduction or the -- or you want to bring the debt down further from the current level?

Just now Chaithanya just explained that we had a guidance given a guidance that the project will be between INR 1,000 to 1,200 and then right around 800. We already have kind of got to that level. But as we explained right now, going forward, the Vietnam crops are going to come in and that's the time there could be newer contracts that could come our way, and therefore, the buying could increase. So we are not changing the guidance as of now. maybe closer to the third quarter when we are meeting again in the third quarter con call, we probably won't be able to give you the exact number how the year-end will look like.

Sure. Sure. So -- I'm sorry, sir, just 1 last one. Basically, you were saying that with the decline in coffee pricing, we might see demand for freezed increasing even further maybe in the newer geography. So are you seeing anything of that sort of playing out?

Already the demand for freeze-dried since last year has been much higher than the pre dried. And if the coffee prices kind of continue to kind of have this kind of a bearish trend, I have a belief that the feed side demand will hold like it has been holding until now. So we will have to just read and watch that how things pan out.

The next question is from the line of Rahul Maheshwary from Ambit Investment Advisors.

Yes. Hope I'm audible?

Yes, yes, Rahul, you are audible.

Yes, yes. A couple of questions. First, can you give what is the capacity utilization for the domestic and the Vietnam as these 2 parts? And currently, any -- how we should look for next 2, 3 years because the majority of the CapEx has been done for 75,000 tonnes? And also the save capacity in the path region, how that has been paid? That is the first question on the CapEx [indiscernible].

Yes. So Rahul, we are like at an aggregate level, I don't want to -- last time also I said that I'll not break it down very deep, but I'll give you a flavor at a overall consol level our capacity utilization is closer to 70-odd percent with freeze dried utilization higher than this. So the freeze dried utilization is much faster. And at least for these freeze dried part, we need not worry about the capacity for the next at least 2 to 3 years. Freeze dried is something that we have to keep an eye on because maybe at best, we may have more year of maybe in 1 year or 1.5 years, we could be very close to full utilization, which means that we'll have to see how do we augment the capacity we have been looking at evaluating both that how do we kind of increase the capacity at our end. Also, we are seeing that is there any strategic partnership that we can do in the short term to make sure that the capacities are there to fuel the growth. So that's on the capacity side. And the question that you asked, again, not trying to break it up unit by unit, but there has been a similar sort of utilization even for the Tirupati unit.

Just wanted, as you had guided for 15% as of volume growth, not just near term, but medium term also, you want to maintain the [indiscernible] that optimum capacity utilization, you would have to go for the capsule expansion. Because generally, we have seen at 80%, 85% you are just a CapEx per [indiscernible].

Right. Correct. So that stays true at 88, 85, you need to kind of go in for expansion because while we talk about rated capacity, a lot depends on how much of changes you are having, what kind of blend that you are taking out. So generally, 80,85 we would be kind of initiating capacity expansion. So that stays true. That is why I said for our straight ride, we are good for another 2, 3 years, we did not worry. But for freeze-dried, we are keeping a close watch on how the demands are shaping up and how our capacity utilization are there that we can take calls only from the segments.

Just adjacent question to this that before expanding the capacity, any debt levels you want to reduce it down so that it doesn't become a balance sheet? I'm not asking from near-term 6 months perspective, but from a strategic direction perspective.

No. So Rahul, I think today, last time, we said we are in a very, very comfortable position. If you remember last time when we were doing expansion our top line used to be INR 2,000 crores and the bottom line was probably INR 200 crores PAT. But with the current position of the PAT itself, which has gone -- which has doubled, and the cash flows are very robust. Just now Chaithanya told you that at INR 1,100 crore gross debt, our net debt is around INR 740 crores. So which means that there is a INR 300 crores, INR 400 crores of cash person that is there. So if at all, if required, a lot of our now capacity expansion can be taken from a large part of it from internal accruals as well, right? So we are in a very comfortable position right now. So we are not kind of thinking too much of putting that, okay, at this level, I'll go for capacity expansion or at that level, I'll go to capacity expansion. So we are good on that front, comfortable on that front. So if at all, capacity has to be expanded, I don't think so, funding the CapEx will be of any issue at all at this point. And I think I just wanted to add the point -- sorry. Sorry. Please go ahead.

Yes, yes. Yes, the second question was regarding -- as the coffee prices have been declining any shift in the consumers from a long-term contract perspective? Because from last 2 years, we were witnessing in your commentary that the customers are preferring shop contracts. So are you witnessing some signs in any inquiry in pipeline, which has been built up?

So yes, some -- quite a bit of long-term contracts are coming back, but Rahul as I was telling you that customers or the clients are a little on a wait and watch when these prices are rising. At the same breadth, I was saying that price is rising stability of prices is more important than a higher level or a lower level. And what has happened is that even now the prices keep fluctuating and that is the reason sometimes the clients are a little -- still on a wait and watch that while the prices have fundamentally come down, the fluctuation still holds true. So in fact, after 3 months, I have been saying that every day, there is a fluctuation between $50 to $100 per day. So 1 day it goes up on day it comes down. So it keeps the client still longer does and -- but having said so, because the price table has come down at a broader level, we are seeing a lot many more medium- and long-term contracts coming back.

Right. And any -- last question to mind, any wallet share increase you're witnessing from the interesting and any new client addition that has taken place of any client run rate that you can write?

So Rahul, again, these are continuous process. There are instances that we have seen wallet-share increases under our clients where we have increased volume or wallet share. And again, there are new clients that have been added. We have been speaking about our initiatives in the Far East which 2 years ago when we were doing the con call, I have said that we are seeding the market and we are trying to kind of get new clients from that side because that's that has been not so strong geography for us. And we are seeing the results now. We are getting a lot of new clients from that market as well. So both the things are happening. There are wallet share increases and the new markets also are doing well for us.

Any clients we have lost or any...

There would have been, yes, absolutely. We see this is a business, I cannot say that I haven't lost a client. It will be a scenario, but there is no significant loss. There is no big client loss. There is no significant loyal. Yes, there are so many small clients who keep coming and going. It's business is always a as I always say that it's a leaking bucket. So there will be -- we must need to make sure that a good proportion of our clients stay intact and your tap is bigger than your lead.

The next question is from the line of [indiscernible].

Just 1 question, sir. This is on the other expenses. So sir, is there any one-off in this quarter because typically, for the large part of FY '26, we were at around INR 140 crores, INR 150 crores, but that has now gone to INR 190 crore, INR 200-odd crores. So is it that the freight or the insurance fees that we are unable to pass on the export side? Or is it that higher A&P spend for the domestic business. So basically, just trying to understand these other expenses, why it is appearing a little on the higher side?

Yes. So I think what you mentioned, we -- there is an increase in freight cost and insurance costs and all that is there, which is leading to this increase. But we are also able to pass. Yes, of course, the 1 any CIF contract which you have done and the prices have increased, you take it up in your pocket. But most of it as and when the price increases are happening, we are able to pass that to. Now what happens is that when even if you convert, let's say, the FOB contracts to CIF contracts and you're passing on to the clients, your top line also goes up and the expense comes down in 6 years. So optically, it looks like that it has gone up, but at a operational profit level, you will see that there is no impact of that.

The next question is from the line of Abishek Mathur from Systematix Group.

Just on the EBITDA, again, sir, for the second quarter specifically, the EBITDA per kg, has it slipped below the INR 130 level slightly. Is that correct to assume?

No, not [indiscernible]. Sorry, go on.

Okay. So is it between 30% to 35%, is that the range that we should be looking at?

I think INR 135 to 140 we had said last time. That is where it stays.

Even for the second quarter as well?

Yes, yes.

Great. And I was asking, sir, you spoke about the mix, the proportion in terms of BC, smart, et cetera. Apart from the mix, any other factors that we should be watching out for when we think about the changes in EBITDA per kg?

No, not really. Because again, like I have been guiding for last 3, 4 quarters, that because the proportions or, let's say, the product mix are now in the basis I don't see much of it because a lot of people had asked that the EBITDA per kilo still increase. So to that, I had said that while we are making efforts, there are various things that goes into deciding EBITDA per kilo. And I don't see that changing either downwards or upwards. So if you kind of follow the volume growth profile. So there won't be any change there, please.

Got it, sir. And secondly, sir, on the -- just going on to the international branded business. So I think this is an area that we don't talk about much on our calls, you have talked about or call in the recent past. I think you indicated a revenue number of INR 26 crores, INR 27 crores where it is at right now you have talked about expansion in the Middle East as a near-term area of [indiscernible]. So if you can just talk about the overall international branded business, how big is it -- are there other pieces apart from per call, and for per call itself, what is the growth and what kind of margins that we are talking about? And also, any other pieces of the international branded business that we don't typically talk about magician spend some time talking about these?

So on the [indiscernible] continues to grow. Again, it's a very different geography, U.K. wherein you have to keep doing the releasing the contracts with the chains. But we have got some good responses from there. As of now, we are looking at a similar kind of a number between INR 25 crores, INR 30 crores that we will end this year at. Having said so, we had indicated that maybe 1, 2 years because we are investing behind the brands also, maybe INR 1 crore or INR 2 crores of loss at an annualized basis. hopefully, by next year, we will start seeing some projects also coming from that front. And now as far as expansion is concerned, yes, we have been kind of working with a lot of chains and distributors across many countries. So for example, now we probably have got -- if you remember, along with Percol, we had got some another 3, 4 brands. And we have said that depending on the geography and depending on strategy, we'll use these brands. So Percol was a certified coffee, but there were a couple of other brands like London Blend per cup that we had got at that point of time. So 1 or 2 brands very soon, we have finalized the deals in the -- with a couple of changes in the U.S. market for 1 or 2 of these brands. They will be launched very soon. We have obviously launched our brand in the metal market. And in fact, we are doing some marketing activity as well sponsoring now of their ticket leads which is going live on 26th of October this year. So -- and Vietnam, again, we are trying to build the branded business, hopefully, in a quarter or so, we will start seeding the market or test marketing some of the stuff there. So lots of these things are happening. Even Middle East. In fact, our team is going next week to meet a couple of distributors to see what all things we can do there. So yes, so this is a little brief on our efforts on the international B2C front.

Got it, sir. So apart from this INR 25 crores to INR 30 crores of Percol that you quantified, overall, what is the estimate of the [indiscernible].

So these are all -- these are all negligible. These are all just seeding happening, maybe a or INR 2 crores more of billing could come, but that will see. But not very worthwhile as of now because these are all seeding activities that we are doing.

So currently, if I say that probably the international branded business would be maybe INR 30 crores, INR 35 crores, would that be a correct assumption?

Yes, around INR 30 crores, you can take that.

The next question is from the line of Akhil Parekh from 360 ONE Capital.