Tata Consumer Products Ltd, formerly known as Tata Global Beverages Limited, is a leading FMCG company that offers a diverse portfolio of products, including beverages, food, and other value-added products.
Known for iconic brands such as Tata Tea, Tetley, Tata Salt, and Tata Sampann, the company operates across multiple geographies, catering to both domestic and international markets.
With a strong focus on innovation, premiumisation, and sustainability, Tata Consumer Products aims to deliver high-quality, healthy, and convenient products to its consumers while maintaining robust growth and expanding its market presence.
Tata Consumer Products Ltd (TCPL) recently announced its Q1 results for FY25, revealing a mixed performance. The company’s net profit dropped by 14% to ₹289 crore, while revenue rose by 16% year-on-year to ₹4,352 crore.
Despite the drop in net profit, TCPL’s EBITDA saw a 22.5% rise to ₹667.4 crore. The EBIT margin improved to 15.3%, up from 14.6% in the same period last year.
Tata Consumer Products key metrics
TCPL’s expenses increased by 19% to ₹3,926 crore, driven by a surge in finance and amortisation charges and a rise in raw material costs. Tea prices in North India and coffee prices saw significant increases of 16% and 57%, respectively.
However, the company’s revenue grew the fastest in thirteen quarters, driven by a 9% rise in the salt business and a 20% organic revenue growth in its ‘growth business’ segment, which includes Tata Sampann pulses.
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Tata Consumer Products branded and non-branded business
The branded business segment, including tea, coffee, water, and other value-added products, grew by 14.5% to ₹3,861.51 crore. The revenue from the branded business in India rose by 13.6% to ₹2,815.12 crore.
The international branded business also saw a 17% increase in revenue to ₹1,046.4 crore. The non-branded business, comprising the plantation and extraction of tea and coffee, recorded a 32.76% rise in revenue to ₹500.58 crore.
Tata Consumer Products market response
Following the release of the Q1 results, TCPL’s shares dropped by over 2%, continuing a three-session losing streak. The shares fell as much as 2.3% to ₹1,166.30, with a market capitalisation of ₹1.16 lakh crore.
Despite this dip, the stock has provided a 37% return to its shareholders over the last year, with a 5% increase over the past six months and nearly 8% in the past month.
Quarterly performance (Amount in Cr):
| Quarterly | Jun 2024 | Mar 2024 | Dec 2023 | Sep 2023 | Jun 2023 |
| Sales | 2,923 | 2,610 | 2,352 | 2,359 | 2,316 |
| Other Income | 9 | 89 | 34 | 52 | 69 |
| Total Income | 2,932 | 2,699 | 2,386 | 2,411 | 2,385 |
| Total Expenditure | 2,574 | 2,438 | 1,999 | 2,042 | 2,003 |
| EBIT | 357 | 260 | 386 | 369 | 382 |
| Interest | 75 | 30 | 14 | 8 | 8 |
| Tax | 94 | 84 | 91 | 93 | 88 |
| Net Profit | 188 | 144 | 280 | 267 | 285 |
Tata Consumer Products brokerage recommendations
Several brokerages have weighed in on TCPL’s performance. Nuvama retained a ‘Buy’ call with a revised target price of ₹1,390, while Motilal Oswal reiterated a ‘Buy’ rating with a target price of ₹1,380.
Goldman Sachs maintained a ‘Neutral’ rating with a target price of ₹1,086, and JP Morgan also maintained a neutral stance with a target price of ₹1,068. Morgan Stanley continued to rate the stock as ‘Overweight’ with a target price of ₹1,288.
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Tata Consumer Products segment performance
The India beverages business saw a 6% revenue growth, while the foods business grew by 30%. The coffee business posted a 28% revenue growth, and the salt revenue grew by 9%. The ready-to-drink business,
Nourishco, saw a 7% growth, which was muted due to a high base and the impact of intense summer conditions on out-of-home consumption. The e-commerce channel grew by 61%, and modern trade grew by 28% during the quarter.
Tata Consumer Products international and joint ventures
TCPL’s international business, excluding recent acquisitions, grew by 10%. The company opened 17 new Tata Starbucks stores, bringing the total to 438 across 65 cities. The company also completed the acquisition of Organic India Private Limited during the quarter.
Tata Consumer Products strategic initiatives
TCPL continues to strengthen its sales and distribution infrastructure in India, implementing split routes expected to add 35% more feet on the street. The company is also piloting its go-to-market strategy in the pharma channel for its health and wellness portfolio and the food service channel.
TCPL’s focus on premiumisation and health & wellness products, alongside digitising the supply chain and expanding its product portfolio, remains a key part of its holistic strategy.
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Tata Consumer Products management commentary
Sunil D’Souza, Managing Director & CEO of TCPL, highlighted the company’s strong topline growth of 16% in Q1 FY25, with 10% organic growth. He noted significant margin expansion in international markets and strong contributions from modern trade and e-commerce channels.
D’Souza also emphasised the company’s ongoing efforts to enhance its sales and distribution infrastructure and its focus on growth businesses and international market performance.
Conclusion
Tata Consumer Products Ltd’s Q1 results for FY25 present a mixed picture with strong revenue growth but a decline in net profit. The company’s strategic initiatives and strong performance in branded and non-branded segments highlight its potential for future growth.
However, challenges such as rising raw material costs and finance charges need to be addressed to sustain profitability.
For millennial and Gen Z investors, understanding TCPL’s performance and strategic direction can provide insights into the company’s future potential and investment viability.
