CCL Products Q2 FY27 Earnings Call: Reiterates 15% Volume Growth Guidance, Freeze-Dried Expansion Decision By Q4

CCL Products (India) Ltd held its Q2 FY27 earnings call on October 15, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Volume-Led Quarter; Profit Growth Outpaces Revenue

• Q2 FY 2026-2027 turnover of Rs.1,215.99 Cr (+7.8% YoY) — EBITDA of Rs.217.3 Cr (+9.5% YoY) and net profit of Rs.130 Cr (+29% YoY); volume growth was double-digit and outpaced value growth due to declining green coffee prices.
• H1 FY 2026-2027 turnover of Rs.2,419.58 Cr (+11.6% YoY) — net profit of Rs.246.96 Cr (+42% YoY).
• Domestic gross turnover of Rs.210 Cr in Q2 FY 2026-2027 — brand sales of ~Rs.140 Cr, with the branded business growth run-rate at 25%.
• EBITDA growth of 9.5% trailed volume growth of 10-15% — a slight dip from the historical trend of EBITDA outpacing volume, explained by product mix; per kg EBITDA gains seen in FY 2025-2026 are unlikely to repeat at the same pace as the mix benefit is now in the base.
• Gross margins at ~62% in Q2 FY 2026-2027, down ~200-300 bps (analyst Ashish Upganlawar's observation) — CEO Praveen Jaipuriar attributed this to the FOB vs CIS contract mix and advised focusing on EBITDA over gross margins.
• Forex gain dropped to ~Rs.11 crores in H1 FY 2026-2027 from ~Rs.40 crores in H1 FY 2025-2026 — management confirmed the resultant headwind on EBITDA per kg.

15% FY27 Volume/EBITDA Guidance Reiterated; Robust H2 Book

• FY 2026-2027 exit guidance maintained at ~15% volume growth with similar EBITDA growth — management stated the company is on track; the Q3/Q4 FY 2026-2027 order book was cited as robust.
• Volume growth guidance for FY 2026-2027 in the 10-15% range — management stated they are well on track for 15%, excluding the impact of forex volatility.
• EBITDA per kg guided at Rs.135-140 for Q2 FY 2026-2027 — likely to remain stable and follow volume growth; management guided the Rs.130-140/kg band will hold even at full 77,000-ton capacity utilization, as FD product mix benefits are already captured in the base.
• Medium-term growth momentum of ~15% guided from FY 2026-2027 onwards — management cited a global B2B market share of ~9-10% as of FY 2026-2027 as providing ample scope for continued expansion.
• Client additions ongoing with no significant losses — wallet share increases and new clients, particularly from the Far East market seeded ~2 years ago (FY25); management described churn as a "leaking bucket" where new business exceeds attrition.

Range-Bound Green Coffee; Vietnam Crop Is the Swing Factor

• Green coffee prices range-bound at $3,400-3,800/ton — with daily fluctuations of $50-100 keeping clients cautious, though medium/long-term contracts are returning as the absolute price level has declined.
• Management cited the upcoming Vietnam crop (Nov/Dec 2026) as a key determinant for future price trends; a further price reduction is expected upon new crop arrival (end Nov/Dec FY 2026-2027), though conflicting reports on El Nino and floods persist.
• El Nino has impacted crops in Southeast Asia (Vietnam) — but the current crop is holding up well and pre-harvest prices have not spiked; CEO expects a clearer picture on coffee price trends in December 2026.
• Other expenses run-rate rose from ~Rs.140-150 Cr in FY 2025-2026 to ~Rs.190-200 Cr in Q2 FY 2026-2027 (analyst observation) — management attributed the increase to 10% volume growth, higher marketing spend for domestic market share, and higher freight/fuel/insurance costs.
• Majority of freight cost inflation is passable to clients — while CIF contracts may temporarily absorb costs, operational profit is unaffected; the expense line is optically inflated by FOB-to-CIF contract conversions.

Freeze-Dried Nearing Full Utilization; Decision by Q4 FY27/Q1 FY28

• Overall capacity utilization at ~70% in Q2 FY 2026-2027 — freeze-dried utilization exceeds the aggregate while spray-dried is lower; spray-dried capacity is sufficient for 2-3 years (FY28-FY30), but freeze-dried may reach full utilization within 1-1.5 years (by H1 FY28).
• Expansion triggers confirmed at 80-85% utilization — management is evaluating internal augmentation or strategic partnerships for freeze-dried; a decision on FDC expansion or strategic tie-ups (contract manufacturing or JV) is expected by Q4 FY 2026-2027 or Q1 FY 2027-2028.
• Any FDC capacity addition would likely be a brownfield expansion of ~6,000 tons (period unspecified) in either Vietnam or India, rather than 10,000 tons — the decision has not been finalized; FDC projects require a lead time of 9-12 months, with machine availability not a constraint (roasters sourced from multiple suppliers in Brazil and Europe).
• Management requires 30-50% capacity underwriting from customers before committing to a new FDC plant — and acknowledged that margins on strategic partnerships could be lower than standalone operations; third-party FDC tie-ups are short-term and opportunistic, while strategic joint ventures remain long-term.
• FD demand has outpaced spray-dried demand since FY 2025-2026 — management attributed the HDC-to-FDC shift to a general premiumization trend in the coffee market (FY 2026-2027), accentuated by the decline in coffee prices; the FD sales proportion remains similar to the last 2-3 quarters (Q3 FY 2025-2026 to Q1 FY 2026-2027) as the full Vietnam FD capacity is now in the base.

Domestic Brands at 25% Run-Rate; International Loss-Making but Improving

• FY27 branded business revenue guidance maintained at ~Rs.550-600 crore — H1 FY27 actuals at ~Rs.250-260 crore, with H2 FY27 growth expected from India seasonality.
• Branded domestic business grew 25% in FY 2025-2026, entirely volume-driven — growth across GT, MT, and e-com channels; management noted a mixed impact from price adjustments (GST cuts, selective increases).
• International branded business (primarily Percol in the UK) guided at ~Rs.30 crores revenue for FY 2026-2027 — currently incurring an annualized loss of Rs.1-2 crores due to brand investments; management expects profitability in FY 2027-2028.
• Other international brands (London Blend, Per Cup) being seeded in the US, Nepal, Vietnam, and Middle East during FY 2026-2027 — revenue from these activities currently negligible at ~Rs.2 crores.
• Malgudi snacks (B2C) remain in test market — encouraging offtakes for the new banana chips product, with more products planned by end of Q3 FY 2026-2027; scaling identified as the key test. Strong Continental brand equity in select pockets is rubbing off onto the new tea segment.
• Quick commerce momentum described as a "constant increase" — but no significant acceleration in Q2 FY27 over Q1 FY27, with ongoing efforts focused on weak platforms and geographies.

Debt Targets Achieved Early; Capex Fundable from Internal Accruals

• Gross debt of Rs.1,192 Cr and net debt of Rs.742 Cr as of Q2 FY 2026-2027 (CFO-reported; also cited as Rs.1,100 Cr gross / Rs.740 Cr net in Q2 FY27) — average interest rate on debt at ~7.25%.
• FY 2026-2027 debt guidance reaffirmed: gross debt of Rs.1,000-1,200 crore and net debt around Rs.800 crore — already achieved in H1 FY 2026-2027; management is not revising guidance downward as Vietnam crop buying could increase working capital needs, with the exact year-end figure to be updated in Q3 FY 2026-2027.
• Cash cushion of ~Rs.300-400 Cr implied (Q2 FY27) — PAT has doubled vs the prior major capex cycle; management indicated future capex can be largely funded from internal accruals.
• Capex for the FD capacity expansion guided at ~Rs.500 crore (FY 2026-2027 onwards) — comparable to the previous expansion in FY 2025-2026, adjusted for inflation.
• On capital allocation trade-off concerns (Naveen Kaushik, iThought PMS) amid rising interest rates and Vietnam crop uncertainty (FY 2026-2027 / FY 2027-2028) — management guided that the strong balance sheet as of Q2 FY 2026-2027 enables simultaneous funding, stating it is not an either/or decision, with sufficient cash flow and cash cushion for growth capex and working capital.
• Acquisitions being evaluated in the international coffee brand space (citing the Percol acquisition as an analog) and domestic non-coffee adjacencies — but no definitive plan; criteria include strategic fit, being "worthwhile" and "well priced"; management declined to provide a specific timeline for FY 2026-2027 or FY 2027-2028, citing the opportunistic nature of deal sourcing and extensive due diligence requirements. Management is also evaluating equity routes for strategic tie-ups given the strong balance sheet, and affirmed the aspiration for double-digit volume growth beyond FY28.