Tata Consumer Q4 Results Review - Beverages Volume Disappoints; Margins Surprise Positively: Nirmal Bang

Nirmal Bang Report

Tata Consumer Product Ltd.'s beverages volume growth for Q4 FY24 came in flattish (our estimate: 2% YoY growth). While the foods business volume growth (reported) was 5% YoY, adjusted for some sales from the Capital Foods acquisition (which came in earlier than our estimate of Q1 FY25 onwards) volume growth was 4% YoY - in line with our expectation.

Sales (adjusted for Capital Foods) marginally missed our expectation by ~1%, but there was a big beat on gross and Ebita margins, which came in much higher than our estimates.

Growth businesses formed 18% of India branded business in FY24 (15% in FY23) and grew by 40%. With new acquisitions Capital Foods and Organic India, the company aims to take contribution from growth businesses to 30% and growth from these businesses is also expected to be at ~30% going forward.

We had already incorporated Capital Foods and Organic India acquisitions into our profit and loss and balance sheet FY25 onwards on publicly shared information and our own assumptions.

Maintain 'Buy' with a target price of Rs 1,310 (55 times FY26E earning per share).

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