TATA CONSUMER PRODUCTS (TCPL) CONSOLIDATED REVENUES GREW BY 17.3%YOY

News: Tata Consumer Products (TCPL) consolidated revenues grew by 17.3%yoy to Rs4,608.2crore largely in-line with our expectation of Rs4,585crore and slightly ahead of average street expectation of Rs4,550crore. Organic revenue growth stood at 12% in Q4 with India beverage organic foods grew by 9% and India foods organic growth of 17%. India branded business underlying volume growth at 5.9%; branded tea business volume grew by 2% and Tata Salt volumes grew by 5%. Capital foods and Organic food together contributed Rs322crore revenues (~7% to the consolidated revenues). Gross margins decreased by 420bps yoy to 41.9% affected by higher tea and coffee prices. However the gross margins improved by 84bps on QoQ basis with sequential dip in the OPM. The efficiencies and integration of benefit of acquired entities led to lower decline in the EBIDTA margins of 256bps yoy to 13.5%, in-line with our expectation of 13.5% and better than average street expectation of 13.2%. The operating profit stood almost flat at Rs621crore. Adjusted PAT after minority interest and share of profit from associates decreased by 5%yoy to Rs353.2crore slightly ahead of our expectation of Rs344crore and ahead of street expectation of Rs280-330 crore for the quarter.

View: TCPL’s operating performance was better than street expectation on back of better-than-expected EBIDTA margins. Some of the key highlights of the call was 1) management maintained its volume growth guidance of 5% in India branded tea and salt business 2) Growth business (28% of consolidated biz) including Tata Sampann, Nourishco, Capital foods and Organic foods will grow at 25-30%. 3) Tea prices are expected to correct as initial crop signs are good with better production in South India and slightly uptick in North India production 4) If tea prices correct by May-June,25, the consolidated EBIDTA margins can improve close to 16% in Q2FY26. Integration benefits of Organic and Capital foods consolidation is in the business and going ahead focus will be on scaling up the businesses. We steady growth outlook and expected recovery in the margins, we expect TCPL’s earnings to grow at CAGR of 20%+ over FY25-27E. TCPL remains our top picks in the consumer good space.

Impact: Positive