Tata Consumer Products Q2 Results: Profit Remains Flat, But Beats Estimates
Tata Consumer Products' revenue was up 13% to Rs 4,214 crore in the September quarter.
(Image used for representational purpose. Source: TCPL website)
Tata Consumer Products Ltd.'s consolidated net profit stayed flat in the second quarter of the current financial year but beat analysts' estimates.
The Tata Tea-maker's profit rose a mere 0.8% to Rs 367 crore in the quarter ended Sept. 30, 2024, according to an exchange filing on Friday. That compares with the Rs 343-crore consensus estimate of analysts tracked by Bloomberg.
TCPL Q2 FY25 Earnings Highlights (Consolidated, YoY)
Revenue up 13% to Rs 4,214 crore versus Rs 3,734 crore (Bloomberg estimate: Rs 4,340 crore).
Ebitda up 17% to Rs 626 crore versus Rs 538 crore (Bloomberg estimate: Rs 626 crore).
Margins at 14.9% versus 14.4% (Bloomberg estimate: 14.4%).
Net profit up 0.8% to Rs 367 crore versus Rs 364 crore (Bloomberg estimate: Rs 343 crore).
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Tata Consumer Products reported a 4% decline in volumes for Q2 FY25, driven by weak demand in key segments. Despite this, the company strengthened its balance sheet by raising capital through a rights issue, which enabled it to become debt-free. However, the quarter was challenging, as margins contracted due to rising raw material costs, including a 20-25% spike in tea prices. Additionally, the company increased salt prices in response to erratic weather conditions affecting production.
The company’s India beverages segment faced headwinds, with competition from Campa and weather disruptions hurting tea and salt production. Coffee sales were a bright spot, surging by 29% in the quarter, while the growth business posted a healthy 15% increase. On the e-commerce front, Tata Consumer saw robust growth, with a 50% jump, complemented by strong momentum in quick commerce. However, Starbucks continues to face muted performance, with traffic being the main issue, though ticket sizes remained stable.
In terms of margins, while the domestic business faced pressure, international and unbranded businesses showed expansion. Despite the challenges, management remains optimistic, projecting a return to a 25-30% growth trajectory soon. They expect overall margins to remain flat or slightly improve in fiscal 2025, with NourishCo expected to grow at a 25% rate by the third quarter of this fiscal. Additional price hikes are anticipated as the company navigates rising input costs.
