Tata Consumer Products Q2 Results: Profit Up 9% But Uncertainty Over Inflation Looms

Tata Consumer Products Ltd.'s quarterly profit rose and was in line with estimates.

Net profit attributable to shareholders of the maker of Tata Tea and Tata Salt rose 9% sequentially to Rs 268 crore in the quarter ended September, according to its exchange filing. That compares with the Rs 284.87-crore consensus estimate of analysts tracked by Bloomberg.

Highlights (QoQ)

• Revenue was up 1% to Rs 3,033.1 crore, compared with the estimated Rs 3,092.8 crore.

• Operating profit rose 3% to Rs 413.3 crore, against the Rs 429.3-crore forecast.

• Margin widened to 13.6% from 13.3%. Analysts expected 13.9%.

• Revenue in the India beverages and food segment remained flat sequentially.

• International business revenue grew 1.8% to Rs 781.27 crore.

Packaged beverages business recorded a 10% sequential revenue growth, on an elevated base last year, the company said.

India Business

• The company recorded market share gains in branded tea.

• Tata Tea Premium was relaunched in Maharashtra, in line with the brand’s hyperlocal strategy.

• Tata Tea Kanan Devan is seeing significant traction in Karnataka, led by distribution expansion and advertising.

• Tata Salt accelerated market share gains and the premium salts portfolio continued its momentum in line with its premiumisation agenda.

• Tata Consumer now has a direct reach to 1.1 million outlets, up from 0.5 million outlets in September 2020. It plans to build a direct reach of 1.3 million outlets by the end of the ongoing fiscal.

• E-commerce sales rose 39% year-on-year, contributing around 7% to domestic sales.

Tata Starbucks, the company said, recorded revenue growth of 128% over the preceding year on a relatively low base of last year that was impacted by reduced mobility. Revenue grew 23% when indexed to the same period in FY20.

Easing of lockdown restrictions is leading to growth across store formats, with high street and highway stores seeing the fastest recovery, the company said, adding delivery channel salience is higher compared to pre-Covid period.

“We delivered another quarter of double-digit revenue growth despite a high base last year,” Sunil D’Souza, managing director and chief executive officer of Tata Consumer Products, was quoted as saying in a statement.

However, inflation and supply side contraints remain a sticking point.

“While the worst of tea inflation seems to be behind us, we're now seeing inflationary trends in packaging and freight costs,” he said.

Among the consumer goods makers on the Nifty 50 that have so far announced earnings for the September-ended quarter, Nestle India Ltd. and Hindustan Unilever Ltd. saw their margins contract amid spiralling raw material prices and freight costs even as they raised prices.