Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tata Consumer Products Ltd (BOM:500800, Financial) reported a 17% revenue growth for the quarter, with 12% organic growth.
- India Foods segment showed strong performance with a 27% growth, 17% of which was organic.
- The company launched 41 new products this year, maintaining a strong focus on innovation.
- International business recorded a 5% revenue growth, with a 2% growth in constant currency.
- The company declared a final dividend of INR8.25 per share, reflecting strong shareholder returns.
Negative Points
- Consolidated EBITDA declined by 1% due to higher input costs, particularly in tea and coffee.
- EBITDA margins were down by 110 basis points, primarily impacted by tea cost inflation.
- The UK business experienced a planned revenue decline of 7% due to competitive discontinuity and the Red Sea crisis.
- The company faced challenges in the tea segment, with only a 1% volume growth for the full year.
- There were technical difficulties during the earnings call, causing a temporary disconnection.
Q & A Highlights
Q: How do you see the Capital Foods and Organic India business grow in FY26, and what about margin synergies?
A: Most margin synergies are realized, with gross margins aligning with business case expectations. We remain confident in achieving a 30% growth rate for these businesses, as we have now fully integrated and are expanding distribution and marketing efforts.
Q: What is the strategy behind launching instant noodles at INR10, and how significant is this category for Tata Consumer?
A: Instant noodles is a large category, and we aim to carve out a niche with our differentiated product. The INR10 pricing offers decent margins, and while we are not taking on the category head-on, we see potential for strong top-line growth.
Q: Why haven't branded players gained significant market share in the tea segment despite inflationary pressures?
A: During high inflation, consumers tend to downgrade. Unlike the last cycle during COVID, local players have maintained their supply chains, preventing significant market share shifts. However, we are seeing growth across our portfolio, and if tea prices stabilize, we expect margins and volumes to improve.
Q: How has the net working capital cycle improved to one day, and what role does e-commerce play in this?
A: E-commerce, including quick commerce, constitutes about 14-15% of our business. The improvement in net working capital is driven by investments in backend capabilities, technology, and tight control over inventories and supplier credits, making this improvement sustainable.
Q: What are the expectations for the next tea crop in India, and how might it affect prices?
A: Early indicators suggest a better crop than last year, with South India showing improvement and North India expected to follow. If this trend continues, we anticipate some price softening, which could positively impact margins.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
