Brewing volumes
Vintage Coffee & Beverages (VINCOFE) is engaged in the manufacturing and export of instant coffee, instant chicory, and other beverages. It specialises in private label solutions for its clients. This Hyderabad-based company manufactures spray dried coffee (SDC), agglomerated coffee, and instant chicory coffee in tins, sachets, pouches, and bulk form. From an annual capacity of 6,500MT, it is looking to scale to 11,000MT by FY26. It is diversifying into freeze-dried coffee (FDC), which has a higher realisation and margin, with an annual production capacity of 5,000MT by FY27 end. This will take its overall annual production capacity to 16,000MT. To fund this, it raised INR215cr in July. VINCOFE was founded by Mr Balakrishna Tati, an industry veteran with over three decades of experience in international sales. CEO Mr C. Jawahar is also a veteran with more than two decades of experience in the coffee business. The company is a strong candidate for a valuation re-rating given the ramp-up in volumes, its superior product mix, and strong management team. We initiate coverage with a ‘BUY’ rating and TP of INR250 (30x FY27E P/E), which offers a potential upside of 50% from its CMP.
Scaling up volumes in a vast coffee market
The global instant coffee market is expected to clock 6% CAGR over 2025–30 to reach USD46bn by 2030. Globally, 400cr consumers consume less than 20 cups of coffee a year. At- home consumption is expected to reach ~1.35bn kg in 2025, with a combined total (at-home and out-of-home) volume of 1.61bn kg. With an annual capacity of 6,500MT, VINCOFE is a small and emerging player in a huge market. It is looking to get customers who are looking to add new blends to its product kit or are launching a new brand. Its manufacturing unit is running at full utilisation, and its order book is full for the year. With new capacities coming on stream in a couple of years, we are confident of a ramp-up in volumes by 4x over FY25– 28 leading to a 74% sales CAGR over the same period.
Superior product mix to drive EBITDA, return ratios to expand
EBITDA growth over FY25–28 will be driven by a favourable shift in the product mix towards higher-margin FDC and agglomerated coffee, coupled with rising sales volumes from new capacity additions and higher prices. With FDC contributing meaningfully from FY28, realisations and profitability are set to expand. Operating leverage from higher utilisation and leaner working capital cycles will enhance cash generation and strengthen the Balance Sheet. Return ratios are expected to surpass 20% by FY27, underpinned by margin expansion, efficient capital allocation, and strong demand visibility. We expect profitability to rise by more than 5x over FY25–28.
Valuation and view
VINCOFE is entering a high-growth phase, with capacity expanding by 4x to 16,000MT by FY27 and a favourable shift in the product mix toward premium FDC and agglomerated coffee. We expect ~75% sales CAGR over FY25–28, with EBITDA/PAT projected to compound at over 87%/76%, driven by operating leverage, higher realisations, and a leaner working capital cycle. With return ratios expected to exceed 20% by FY27, it is well placed to deliver multi-fold earnings growth. The stock trades at 13x FY27E EV/EBITDA and 18x FY27E P/E, at a discount to the sector leader CCL Products (India) or CCLP (18x EV/EBITDA and 28x P/E). Given its superior growth trajectory, improving return ratios, and visibility from long-term client relationships, we believe the stock deserves a re-rating. We initiate coverage with a ‘BUY’ rating and TP of INR250 (30x FY27E P/E)
