Tata Consumer Products on Wednesday reported a 59% jump in its net profit to Rs 345 crore, beating street expectations. The upswing in profits was on account of price hikes and a double-digit growth in its food and beverages business in India.
The Bloomberg Consensus Estimates had pegged the company’s net profit for the quarter at Rs 322 crore.
The revenue from operations also rose 17% to Rs 4,608 crore, beating estimates that had pegged the revenue growth at Rs 4,556 crore. However, tea prices continued to put a strain on the firm’s financials. While it was above the estimated Rs 612 crore, the Ebitda fell 1.4% from last year to Rs 621 crore. The Ebitda margin narrowed to 250 basis points from last year to 13.5%.
Sunil D’Souza, Managing Director and CEO, Tata Consumer Products, said that if the price of tea wasn’t high, the Ebitda margin would have grown by 80 basis points (bps).TCPL clocks around 70% of its revenue from its food and beverages businesses under brands like Tata Tea, Tetley, and Tata Soulfull.
The tea prices have been high due to adverse weather conditions and supply chain disruptions. To offset these costs, the firm has been hiking the prices of its tea brands. The last such price increase was in February. In recent years, the company has diversified its portfolio away from tea and salt and invested in distribution to boost sales. This has helped the firm to grow its sales, despite a muted consumption growth in urban India.
D’Souza said that in the last two to three months, the company has witnessed sales growth across its portfolio.
“If the pricing is held steady, volume growth may gain traction,” he said, adding that prices may also be slashed if the tea output is healthy this season.
The company’s Ebitda is likely to stabilise by the second quarter of FY26. Even for its salt business, the company has taken price hikes. However, the increase in prices did not completely offset the cost inflation.
The company reported its highest branded business revenue growth in the capital foods and organic segment, which includes packaged noodles and sauces under the brand names Ching’s and Organic India respectively.
TCPL also sells coffee under its beverage business. It said the cocoa and coffee prices, which were high for the last few quarters, have started to soften, especially due to a good crop output in South India.
During the quarter, the firm opened six new Starbucks stores. In FY25, it added another 58 coffee outlets. D’Souza said that the firm has tempered the opening of outlets due to the overall demand sentiment.
The firm does not have a significant capex planned in FY26. In terms of channels of distribution, TCPL stated that its e-commerce sales grew 66% and modern trade recorded 26% growth during the quarter. The board has also recommended a dividend of ` 8.25 per equity share of Re 1 each for FY25.