Summary
CCL Products (India) Limited - Q3 FY 2025-26 Earnings Call Summary Thursday, February 05, 2026 11:00 AM
Event Participants
Executives 6 B. Mohan Krishna (Executive Director), Challa Rajendra Prasad (Executive Chairman), Challa Srishant (Managing Director), Chaithanya Agasthyaraju (CFO), Praveen Jaipuriar (CEO), Sridevi Dasari (Company Secretary)
Analysts 8 Abhishek Mathur (Systematix Group), Deepak (Sundaram Mutual Fund), Dipak Saha (Nirmal Bang), Kashyap Javeri (Emkay Investment Managers), Khushal (Asian Broking), Lokesh Manik (Vallum Capital), Samay Sabnis (Helios Capital), Shirish Pardeshi (Motilal Oswal)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Revenue | ₹1,053 crores | +38% YoY; driven by 20% volume growth and 18-20% value growth. |
| EBITDA | ₹187.56 crores | +47% YoY; margin expansion aided by better capacity utilization of Freeze Dried (FD) coffee. |
| Net Profit (PAT) | ₹100.26 crores | +59% YoY; significant growth compared to ₹63 crores in Q3 FY25. |
| Domestic Sales | ₹180 crores | Domestic branded sales contributed ₹120 crores for the quarter. |
| Gross Debt | ₹1,448 crores | Reduced from ₹2,000 crores YoY; decreased despite volume growth due to working capital efficiency. |
| Net Debt | ₹1,248 crores | Management surpassed its guidance of ₹1,250 crores a quarter ahead of schedule. |
| EBITDA/kg | ₹135 - ₹140 | Improvement from historical levels; driven by shift toward high-margin freeze-dried products. |
| Capacity Utilization | 65% - 70% | Blended group utilization; FD capacity in Vietnam currently at 25-30% in its first year. |
Geographic & Segment Commentary
- Domestic Branded Business: Achieving 40-50% annual growth with expected FY26 branded sales of ₹430-440 crores. The company is now the #3 player in e-commerce and modern retail platforms, directly reaching 140,000 outlets and expanding aggressively into North and West India.
- Vietnam Operations: New Freeze Dried capacity is ramping up as planned; utilization is currently at healthy first-year levels. Proximity to Southeast Asian markets and favorable tax structures continue to support the cost-plus manufacturing model.
- International Markets: Seeing robust volume growth across Africa, America, and Europe. The UK branded acquisition continues to grow “handsomely” despite the high barriers to entry in brand-conscious European markets.
Company-Specific & Strategic Commentary
- Working Capital Efficiency: Significant deleveraging was achieved by reducing DIO (Inventory) and DSO (Receivables) days. Management renegotiated shorter credit periods with customers to generate ₹700 crores in free cash flow on a TTM basis.
- Product Innovation: Focused on “beyond coffee” diversification, including a micro-launch of traditional snacks under the brand ‘Malgudi’ in Hyderabad. Within coffee, focus remains on high-value products like instant cold brew, micro-grounds, and functional 3-in-1 premixes.
- Small Pack Focus: Running at 100% capacity for sticks and small pouches (LUPs) due to high demand in Africa and India; management plans modular capacity expansion for these formats shortly.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| FY26 Volume Growth | 18% - 20% | Expected to remain steady for the full year despite a high base in Q4. |
| FY26 EBITDA Growth | ~25% | Revised upward from previous 15-20% range due to strong 9M performance. |
| Debt Level | ₹1,250 crores | Reaffirmed gross debt target for March 31, 2026, though currently ahead of schedule. |
| Capacity Utilization | 85% - 90% | Target utilization within 2 years; plans for fresh capacity additions will be evaluated in 18 months. |
Risks & Constraints
| Risk | Context |
|---|---|
| Coffee Price Volatility | Green coffee remains in the ₹3,600-₹4,000 range; while cost-plus models protect margins, extreme spikes can strain working capital and delay long-term contracts. |
| New Category Failure | The company recently exited the plant-based meat segment due to poor category evolution, highlighting risks in non-core diversification. |
| Regulatory/Trade Barriers | Europe maintains strict dairy import restrictions, preventing the supply of 3-in-1 coffee premixes containing non-European dairy from Indian/Vietnam plants. |
Q&A Highlights
Margins and Pricing
- Question: How will declining coffee prices affect EBITDA per kg? (Abhishek Mathur)
- Answer: EBITDA per kg will remain intact because the company operates on a cost-plus model. The focus is on product mix (Freeze Dried vs. Spray Dried) rather than speculating on green coffee prices (Praveen Jaipuriar).
Deleveraging Strategy
- Question: How did debt decrease while volumes grew? (Deepak)
- Answer: Primarily through operational efficiencies, including reducing DSO by renegotiating credit periods and managing lower inventory (DIO) as coffee prices stabilized (Chaithanya Agasthyaraju/Praveen Jaipuriar).
Domestic Expansion
- Question: What is the strategy for Non-South Indian markets? (Dipak Saha)
- Answer: Utilizing “cream distribution” (targeting top 5-10% outlets) and aggressive E-commerce/Quick Commerce (Blinkit, Amazon) where the brand has already achieved double-digit market share (Praveen Jaipuriar).
Future Capacity
- Question: When will you add the next phase of capacity? (Samay Sabnis)
- Answer: Once utilization hits 80-85% in approximately 2 years. Management will begin evaluating strategic partnerships or new builds in about 18 months (Praveen Jaipuriar).
Key Takeaway
CCL Products delivered a robust Q3 FY26, characterized by a 38% revenue increase and a 59% jump in PAT. The performance was anchored by 20% volume growth and a strategic shift toward high-margin Freeze Dried products, which pushed EBITDA per kg to the ₹135-₹140 range. Notably, the company successfully deleveraged its balance sheet, reducing gross debt to ₹1,448 crores through disciplined working capital management and improved cash flow generation (₹700 crores TTM). The domestic branded business remains a high-growth engine, targeting over ₹430 crores in sales for the full year with expanding footprints in North and West India. While management highlighted potential volatility in green coffee prices post-Tet holidays, they remained confident in maintaining an 18-20% volume growth trajectory and upgraded the full-year EBITDA growth guidance to approximately 25%. Forward outlook remains positive as the company nears 85-90% utilization over the next 24 months.
Want more insights like this?
Subscribe to get deep dives delivered to your inbox.
More Earnings Summaries
Explore more Q3 FY26 earnings call analyses: