Tata Consumer Products Ltd (TCPL), one of India's leading FMCG companies, announced its Q2 FY25 results on October 18, 2024. The company reported a flat net profit of ₹359.3 crore for the quarter ending September 30, 2024. This figure surpassed market expectations, with the CNBC-TV18 poll forecasting a net profit of ₹337.3 crore for the period.

Key Financial Highlights:

• Net Profit: ₹359.3 crore (Flat year-on-year)
• Revenue from Operations: ₹4,214.5 crore (13% growth YoY)
• EBITDA: ₹626.3 crore (16.6% growth YoY)
• EBITDA Margin: 14.9% (versus 14.4% YoY)
• Profit Before Exceptional Items and Tax: ₹424 crore (16% decline due to finance costs and acquisition-related amortisation expenses)
• Group Net Profit Before Exceptional Items: ₹388 crore (3% increase YoY)

The company's revenue for Q2 FY25 grew by 13% year-on-year to ₹4,214.5 crore, up from ₹3,733 crore in the corresponding quarter of the previous fiscal. However, the reported revenue fell short of analysts' expectations, with the CNBC-TV18 poll predicting ₹4,320 crore. Tata Consumer's operating profits, or EBITDA, rose by 16.6% to ₹626.3 crore, which also trailed the forecast of ₹644 crore. The EBITDA margin stood at 14.9%, in line with projections.

Business Segment Highlights:

• India Beverages: Recorded a modest 3% growth in revenue, but when excluding the impact of Organic India, revenue actually declined by 4%. The decline was attributed to weak consumer demand. On the brighter side, the coffee segment performed well, boasting a 29% increase in revenue.

• India Foods: Achieved a robust 28% revenue growth, or 9% excluding Capital Foods. Tata Consumer's value-added salt portfolio continued its upward trajectory, growing 26%, with rock salt volumes hitting record highs.

• International Business: Reported a 7% growth in revenue (5% in constant currency). The company noted strong performance from its international and non-branded businesses, which significantly contributed to the overall revenue and EBITDA growth.

CEO’s Remarks:

Sunil D'Souza, Managing Director and CEO of Tata Consumer Products, expressed satisfaction with the company's performance in Q2, particularly highlighting growth in the India salt business and product lines like Tata Sampann and Tata Soulful. He also noted challenges in the tea segment, impacted by subdued category trends, but expressed optimism about the growth potential from acquisitions like Capital Foods and Organic India.

“We delivered a topline growth of 13% in Q2 FY25, with an EBITDA growth of 11%. The integration of Capital Foods and Organic India is now complete, and we are starting to see strong synergy benefits. Both businesses witnessed strong quarter-on-quarter growth,” D'Souza stated.

D'Souza also announced that Tata Starbucks has become the largest café operator in India by store count, with 457 stores in 70 cities.

Market Reaction:

Following the announcement, Tata Consumer Products Ltd shares ended the trading session at ₹1,097.65, a rise of ₹7.20 or 0.66% on the Bombay Stock Exchange (BSE). The results were declared after market hours.

Conclusion:

Tata Consumer Products Ltd's Q2 FY25 performance reflects resilience amid a challenging market environment, with solid growth in its food and salt businesses and strong international performance. However, the company continues to face challenges in its core tea business. With key acquisitions like Capital Foods and Organic India contributing to growth, the company remains poised for further expansion in the coming quarters.