Tata Consumer Products Limited — Q1 FY26 earnings call

Call held 23 Jul 2025

Management summary

Tata Consumer Products Limited reported a robust 10% consolidated revenue growth to ₹4,779 crores in Q1 FY26, driven by strong performance in India branded businesses and international markets. However, consolidated EBITDA declined 8% (250 bps) primarily due to elevated tea costs and coffee price corrections. Growth businesses, including RTD, Capital Foods, and Organic India, faced transitory challenges, but management expects stabilization and accelerated growth in coming quarters.

Highlights

  • Consolidated revenue grew 10% to ₹4,779 crores.

  • India branded business UVG was 6.8%.

  • Core India businesses (tea and salt) grew double digit in value and volume.

  • Sampann grew 27%, tracking an ARR of ₹200 crores.

  • International business grew 5% in constant currency, with U.S. coffee growing 20%.

  • E-com and quick commerce grew 61%, and modern trade grew 21%.

  • Starbucks returned to same-store sales growth.

  • Total net profit increased 15%, leading to 12% EPS growth year-on-year.

Concerns

  • Consolidated EBITDA declined 8% (250 bps), primarily due to tea costs (160 bps) and coffee price corrections.

  • Growth businesses grew 7%, which was below management's expectations, mainly due to unfavorable weather impacting RTD.

  • Capital Foods and Organic India were impacted by transitory issues including capacity constraints, inventory rightsizing, and supply chain hiccups.

  • RTD revenue declined 13% due to price reindexing from the previous year, despite 3% volume growth.

  • Non-branded business had a soft quarter due to falling coffee prices, impacting profitability (margins corrected from 22% to 12%).

Key financials

  1. Consolidated Revenue ₹4,779 Cr +10%YoY
  2. Consolidated EBITDA Growth — -8%YoY
  3. Consolidated EBITDA Margin Impact -250 bps
  4. Consolidated PBT ₹465 Cr +10%YoY
  5. Total Net Profit Growth — +15%YoY
  6. EPS Growth — +12%YoY
  7. India Branded UVG 6.8%

What they filed

Q1 FY27: revenue up 11.9%, net profit up 28.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue4,214 4,444 4,608 4,779 4,966 +18%5,112 +15%5,434 +18%5,349 +12%
EBITDA626 565 621 607 672 +7%721 +28%792 +28%724 +19%
Net profit367 282 349 332 407 +11%385 +37%424 +21%427 +29%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • India Beverages
    8% Revenue Growth
  • India Foods
    14% Revenue Growth
  • International Business
    9% Revenue Growth (Reported)5% Revenue Growth (Constant Currency)
  • Non-branded Business
    7% Revenue Growth
  • Growth Businesses (Aggregate)
    7% Growth
  • Salt
    5% Volume Growth13% Value Growth
  • Value-added Salts
    31% Growth
  • Sampann
    27% Growth₹200 Cr Annual Run Rate
  • RTD Business
    3% Volume Growth₹271 Cr Net Revenue-13% Revenue Growth
  • Tata Copper+
    11% Growth
  • Capital Foods & Organic India (Combined)
    50% Margin
  • Organic India E-commerce
    3.5× Revenue Growth
  • Starbucks (New Stores)
    6 units Stores Added
  • Starbucks UK
    20% Market Share
  • Starbucks US Coffee
    20% Growth4% Market Share
  • Non-branded Business Margins
    12% Margin Correction

Capital allocation

high confidence
  • Liquidity Cash ₹400 Cr Company has ₹400 crores cash on balance sheet, compared to being negative last year before rights issue.
    We've got roughly INR400 crores of cash on our balance sheet. Just to recap, at this time last year, we were negative since we had not done our rights issue.

Guidance & targets

Profitability

  • A&P to Sales Profitability · short to medium term · Medium confidence 7.5%-8%

    Previously 7% → 7.5%-8%

    We have maintained our A&P-to-sales in the 7% range. Albeit in the short to medium term, we would like to go closer to 7.5%-8%.

    — Sunil D'Souza

  • Tea Gross Margin Profitability · by Q3 · High confidence 34% to 37%
    Broadly, tea should operate in a margin range of about 34% to 36%, 37% gross margin. ... by Q3, you should see margins operating in this range.

    — Sunil D'Souza

  • EBITDA Margin (Consolidated) Profitability · by Q3 · High confidence 16%
    So I do think by Q3, we should definitely be able to get to it. Q2 would be a bridge between where we are to that.

    — Sunil D'Souza

Volume

  • NourishCo Volume Growth Volume · next 3 quarters · High confidence upwards of 30%
    And as I said, we do expect saying for the next 3 quarters, we will grow upwards of 30%.

    — Sunil D'Souza

Revenue

  • Capital Foods and Organic India Growth Revenue · year-on-year · High confidence 30%
    Capital Foods and Organic India, as we said, are part of the growth portfolio for us, where we've guided for 30% of the portfolio growing at 30%. So in broad terms, you should expect a year-on-year growth of about 30%.

    — Sunil D'Souza

  • Total Value Growth Revenue · High confidence 6% to 8%
    But overall, I would not change my guidance of overall, I would say between 6% to 7-8% total value growth.

    — Sunil D'Souza

What to watch in Q2 FY26

Tea Gross Margin Normalization

by Q3
Current 10 percentage points below target range
Target 34% to 37% gross margin

Why it matters

Recovery of tea margins is crucial for overall profitability improvement, as tea costs significantly impacted Q1 EBITDA.

Broadly, tea should operate in a margin range of about 34% to 36%, 37% gross margin. We're about 10 percentage points below that. ... by Q3, you should see margins operating in this range.

Risks & concerns

  • Coffee price corrections impacting Non-branded profitability

    high

    Falling coffee prices led to a soft quarter and margin correction from 22% to 12% in the Non-branded segment.

    Management acknowledged

  • Unfavorable weather impacting RTD business

    medium

    Early monsoon impacted RTD business, leading to below-par growth for growth businesses.

    Management acknowledged

  • Transitory issues in Capital Foods and Organic India integration

    medium

    Capacity constraints, inventory rightsizing, and supply chain hiccups (export/imported ingredients) impacted growth.

    Management acknowledged

  • Volatility in tea and coffee commodity prices

    medium

    Tea prices remain favorable but coffee prices are in a short-term declining phase with volatility, requiring agile sourcing and inventory management.

    Management acknowledged

  • Capacity constraints for Capital Foods' noodles

    medium

    Underestimation of demand and capacity constraints for noodles impacted Capital Foods' growth, now being addressed.

    Management acknowledged

  • Geopolitical tensions impacting Starbucks (India) operations

    low

    Operation Sindhoor in North and Northwestern India led to reduced store timings and shutdowns, impacting Starbucks sales.

    Management acknowledged

Q&A highlights

7 direct
Tea commodity price trends and margin normalization Direct
Broadly, tea should operate in a margin range of about 34% to 36%, 37% gross margin. We're about 10 percentage points below that. So two things will happen from here on. A) is, like I said, 70% of the pricing we've already taken, a). So therefore, as tea prices come down and the latest auction for which data is available, tea prices were down 13% versus the same period last year. ... by Q3, you should see margins operating in this range.

Analyst sought clarity on the timeline and extent of tea margin recovery given commodity price movements, which management addressed with specific targets.

Asked by Jay Doshi

Non-branded business margins and impact of falling coffee prices Direct
The issue with falling coffee prices is your trailing inventory, right? That is the whole catch. Because you're sitting with inventory and selling it at a lower price, it will stabilize at a point in time. And I would dare say it's we are probably close to the bottom on the margins front. ... I think probably we'll have to see one more quarter, and of course, it largely depends on where the coffee prices finally settle.

Analyst questioned the sharp decline in Non-branded margins (22% to 12%) due to coffee prices, and management provided a timeline for stabilization.

Asked by Jay Doshi

Northeast India rain deficit and its risk to tea crop/prices Partial
So Abneesh, actually speaking, if you look at the crop itself, I think we are already ahead of North India compared to last year, right? ... Now we do expect this year to be a normal even the IMD has forecast a normal rainfall season. And if that happens, there's no reason for us not to go back to the cropping levels of 2023 and therefore, the pricing to start unwinding.

Analyst raised a potential risk to tea supply, but management expressed confidence in a normal rainfall season and unwinding prices.

Asked by Abneesh

Business model and competition in dry fruits category Direct
In dry fruits is one of the categories, which is the largest lack of trust from a consumer perspective because it's very, very difficult for the consumer to judge whether it's INR150, INR200 or INR250. I mean, this is all the retailer telling them that this is the price, right? And that is why it's got off to a phenomenal start. ... Now that we have figured out the supply chain for dry fruits ... now you'll see us expanding into the value-added and driving up margins in this category.

Analyst questioned the long-term competitive advantage in dry fruits, and management highlighted the trust factor and future value-added expansion.

Asked by Abneesh

NourishCo (RTD) Q1 performance, price cuts, and future volume growth Direct
So we've roughly doubled the retailer margin, and that is what has driven down value. So 3% volume growth, negative 13% value. But that is now behind us, because now Q2 onward, I'm cycling the INR6.50 pricing. And therefore, as I said, my volume growth will now translate into value growth as well. ... we do expect saying for the next 3 quarters, we will grow upwards of 30%.

Analyst sought clarification on the RTD business's negative value growth despite volume growth, and management explained it was due to past price reindexing and projected 30%+ growth for the next 3 quarters.

Asked by Abneesh

Challenges and requirements for Capital Foods' growth post-acquisition Direct
Capital Foods, to your question, as I mentioned, there was a bunch of issues and we've termed it as transitory because more or less, we've figured out how to tackle it. Exports, we had shipping issues, especially with the geopolitical issues around the Middle East, et cetera. ... And then, of course, things like noodles, let me say, my team did not figure out the capacity constraints in the right manner, which we unlocked only towards the second half of the quarter.

Analyst probed the reasons for Capital Foods not achieving expected growth, and management detailed specific transitory issues related to exports, imported ingredients, and noodle capacity constraints.

Asked by Abneesh

Nielsen panel changes and their impact on market share data Direct
So Vivek, normally, see, Nielsen is a panel, and the panel is supposed to mirror exactly the consumer offtake and, I would say, different channels per se. Now they rejigged their general trade panel in line with what they are seeing on offtakes by geography, pin code, et cetera, et cetera, size of outlet, et cetera. It used to happen once every 3 years. But this time, they have reindexed it within a year. ... I would say I look more for broad execution metrics and not absolute market share.

Analyst questioned the reliability of Nielsen data given recent panel changes, and management clarified the changes and their preference for internal execution metrics over absolute market share from Nielsen.

Asked by Vivek M.

Impact of tariffs/geopolitical tensions on international business Direct
I mean, 50% tariffs from Brazil, we can imagine what's going to happen to coffee prices, if it goes through. Now it's your guess against mine, whether it will go through, right? But competitively, we will not be disadvantaged in coffee. ... The second piece is on the organic stuff, 40% of Organic India turnover is in the U.S. ... So therefore, again, competitively, I don't think there will be a disadvantage.

Analyst asked about the potential impact of global tariffs on international business, and management explained that for coffee and Organic India products, the impact would be category-wide rather than a competitive disadvantage for the company.

Asked by Vivek M.

3 min read 7 chapters

Detailed narrative

Q1 FY26 Performance Overview

Tata Consumer Products Limited delivered a 10% consolidated revenue growth in Q1 FY26, reaching ₹4,779 crores. Despite this, consolidated EBITDA saw an 8% decline, translating to a 250 bps margin contraction, primarily attributed to higher tea costs and coffee price corrections. However, PBT grew 10% to ₹465 crores, and total net profit increased by 15%, resulting in a 12% year-on-year EPS growth, benefiting from the absence of interest costs post-rights issue.

India Branded Business Performance

The India branded business demonstrated a UVG of 6.8%, with core categories like tea and salt achieving double-digit growth in both value and volume. Value-added salts notably grew 31%. The growth businesses, however, grew 7%, which was below management's expectations, mainly due to the RTD segment being impacted by early monsoon and unfavorable weather. Sampann continued its strong momentum, growing 27% and is now tracking an Annual Run Rate (ARR) of ₹200 crores.

International Business & Starbucks Update

The international business maintained its momentum with a 5% constant currency growth. The U.S. market showed strong performance, with coffee growth at 20% and a 4% market share. Starbucks, the coffee chain joint venture, returned to same-store sales growth in April and June, despite a decline in May due to geopolitical tensions and store shutdowns in North and Northwestern India. Six new Starbucks stores were added during the quarter, focusing on footprint expansion across metros and smaller cities.

Input Cost and Margin Dynamics

EBITDA margin was significantly impacted by input costs, with 160 bps attributed to tea costs and the remainder to coffee price corrections. Tea prices are currently favorable, being 13-15% below last year's levels, and are expected to trend lower. Management anticipates tea gross margins to normalize to a range of 34-37% by Q3 FY26. Non-branded business margins corrected sharply from 22% to 12% due to falling coffee prices, which impacted profitability in that segment.

Strategic Priorities and Multichannel Capabilities

The company continues to focus on strategic priorities, including maintaining A&P-to-sales in the 7% range, with an aim to increase it to 7.5-8% in the short to medium term. Multichannel capabilities showed strong growth, with e-commerce (including quick commerce) growing 61% and modern trade growing 21%. The pharmacy channel rollout expanded to 40 cities, and the vending business now holds a 5% share in the bean-to-cup market with 5,000 machines.

Capital Foods & Organic India Integration

Capital Foods and Organic India, acquired businesses, faced transitory issues in Q1 FY26, including capacity constraints for noodles, inventory rightsizing, and supply chain hiccups related to exports and imported ingredients. Management stated that most of these issues are being addressed, and they expect these businesses to stabilize and achieve a year-on-year growth of about 30% from Q2 onwards. Organic India's e-commerce revenue grew 3.5x year-on-year, demonstrating strong channel response.

NourishCo Business Re-indexing

The RTD business under NourishCo experienced a 13% revenue decline despite 3% volume growth. This was attributed to the re-indexing of prices to retail that occurred in Q2 of the previous year. Management expects that as the company cycles this re-indexed pricing, volume growth will translate into value growth, projecting an 'upwards of 30%' growth for NourishCo over the next three quarters.

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