Tata Consumer Share Price Plummets As Q2 Profit Remains Flat, Margins Contract

Tata Consumer Products Ltd.'s share prices tumbled over 9% on Monday after its earnings were flat and margins contracted in the second quarter.

The Tata Tea-maker's net profit rose a mere 0.8% to Rs 367 crore in the quarter ended Sept. 30, according to an exchange filing on Friday. This figure, although flat, managed to exceed analysts' expectations, which had set a consensus estimate at Rs 343 crore, according to Bloomberg.

The company's revenue from operations for the quarter was Rs 4,214 crore, reflecting a 13% increase compared to Rs 3,734 crore in the same period last year. The growth was driven by a notable performance in the India Foods segment, which saw revenues rise by 28% with an organic growth rate of 9%. However, the India beverages segment faced challenges, growing only 3% as tea volumes declined by 4% year-on-year.

Overall volume growth for Tata Consumer Products in the reported quarter was 1%. Additionally, the consolidated earnings before interest, taxes, depreciation, and amortisation increased by 11%, but margins contracted by 30 basis points to 14.9%. This contraction was attributed to rising input costs in the India tea business.

Tata Consumer's share price fell as much as 9.33% to Rs 996.00 apiece. It pared losses to trade 8.4% lower at Rs 1,001.35 apiece as of 10:03 a.m. This compares to a 0.30% decline in the NSE Nifty 50 Index.

The stock has risen 12.8%% in the last 12 months. Total traded volume so far in the day stood at 1.84 times its 30-day average. The relative strength index was at 15.

Out of 29 analysts tracking the company, 22 maintain a 'buy' rating, six recommend a 'hold,' and one suggests a 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an downside/upside of 24%.