Tata Consumer Q4 Results Review: Non-Branded Business To Drive Margins

Tata Consumer Products' margins beat estimates in the fourth quarter of fiscal 2024. However, its revenue and profit missed expectations. Despite this, the company's board has recommended a dividend of Rs 7.75 per share.

Net profit of the Tata Group unit was down 22.5% year-on-year at Rs 267.71 crore during the quarter ended March 2024, according to an exchange filing. Its revenue rose 8.5% to Rs 3,926.94 crore. Tata Consumer reported an exceptional loss of Rs 216 crore related to an acquisition.

TCPL's stock was under pressure due to a lack of volume growth in its beverage business, which was only 3%. Overall, like-for-like growth stood at only 4%.

• Revenue Growth Excluding Acquisition: Excluding the impact of acquisitions, the company saw 6% growth in revenues.

• Volume Expansion: The year-on-year growth excluding acquisitions stood at 11%, driven by a 4% volume growth, reflecting underlying strength in the company's core operations.

• Like-for-Like Volume Growth: Tata Consumer reported a like-for-like volume growth of 4%, showcasing sustained consumer demand and market acceptance.

• International Business: The international segment's revenue grew 7% (5% in constant currency), indicating the company's global footprint and adaptability to diverse market conditions.

• Growth Businesses: Tata Consumer's growth businesses collectively surged by an impressive 40% year-on-year, underscoring successful strategic initiatives and product innovations.

• India Business: The segment witnessed a 10% year-on-year growth (7% on a like-to-like basis).

• India Beverages: While India beverages grew by 3%, with flat tea volumes year-on-year, other segments like coffee reported a 45% growth.

• India Foods: The segment reported 20% growth.

• International Tea and Salt: International tea and salt segments recorded 10% and 5% year-on-year growth, respectively.

• Tata Starbucks: The partnership with Starbucks yielded positive results, with revenue growing by 7% year-on-year.

While Morgan Stanley and Nuvama are bullish on Tata Consumer, citing growth strategies and performance across segments, JPMorgan remained neutral, expressing concerns over India performance. CLSA has an 'underperform' rating on the stock, focusing on specific margin drivers.

Progress on strategic priorities, including scaling growth businesses, stands out, Morgan Stanley said in a note. DIP (Distribution, Innovation, Premiumisation) agenda continues and growth businesses (except Nourishco) performed well during Q4, it said.

However, JPMorgan said India performance lagged expectations. Higher profitability of non-branded and overseas segments drove Ebitda beat, but Indian branded revenue growth was below expectations.

TCPL continued to drive growth via innovation and distribution expansion, Nuvama said, adding that this is what kept it bullish on the company.