Neutral CCL Products; target of Rs 938: LKP Research

LKP Research's research report on CCL Products

CCL Products Ltd (CCL) reported a strong 36.5% YoY revenue growth in Q1FY26, crossing ₹10.6 bn for the first time, driven by steady volumes and branded sales. Quarterly revenues have grown at a 27% CAGR over the last two years, supported by capacity expansion and global demand. Gross margin declined to 32.6% due to mix change and coffee price volatility, though gross profit still rose 17% YoY. Its EBITDA rose 22% YoY to ₹1.59 bn, but PAT was flat YoY and down 29% QoQ due to peak depreciation and interest costs, both expected to ease from Q3. Branded and domestic businesses remained strong, with 20% YoY growth and improved margins; management reaffirmed 10–20% volume and 15–20% EBITDA growth guidance for FY26. Net debt declined to ₹16.7 bn, with working capital likely to ease as coffee prices stabilize; depreciation and interest burden are expected to gradually reduce.

Outlook

We revise our rating to ‘NEUTRAL’ with a target price of ₹938, as near-term positives appear priced in; we estimate 22%/19%/22% CAGR in Revenue/EBITDA/PAT over FY24–27.

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