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    Tata Consumer

    TATACONSUM
    Fast Moving Consumer Goods·23 Jul 2025
    Management Summary

    Tata Consumer reported a resilient Q1 FY26 with consolidated revenue up 10% to ₹4,779 crores and PAT growing 10%. The India branded business showed strong volume growth of 6.8% UVG, and e-commerce channels surged 61%. However, consolidated EBITDA declined 8% due to elevated tea costs and falling coffee prices impacting non-branded margins. Growth businesses underperformed, growing 7% against a 30% target, primarily due to supply chain and weather-related issues.

    Highlights

    6

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

    • India branded business achieved 6.8% UVG, with core India businesses (tea and salt) showing double-digit value and volume growth.

    • Consolidated PAT increased 10% year-on-year.

    • E-commerce and quick commerce channels demonstrated robust growth of 61%.

    • Sampann segment continued its strong momentum with 27% growth, tracking an ARR of ₹200 crores.

    • Starbucks returned to same-store sales growth in April and June.

    Concerns

    4

    • Consolidated EBITDA declined 8%, primarily due to tea costs (160 bps impact) and coffee price corrections in the Non-branded segment (total 250 bps margin decline).

    • Growth businesses (NourishCo, Capital Foods, Organic India) grew 7%, falling short of the 30% target, mainly due to transitory issues like unfavorable weather impacting RTD, capacity constraints, and supply chain hiccups for Capital Foods and Organic India.

    • RTD business revenue declined 13% despite 3% volume growth, attributed to price re-indexing from the previous year.

    • Non-branded business margins corrected significantly from 22% to 12% due to falling global coffee prices and inventory impact.

    What Changed2

    vs Q3 FY26

    Guidance items11 → 7 (-4)Risks discussed3 → 5 (+2)

    Key financials

    Single quarter

    07 metrics
    1. 01Consolidated Revenue₹4,779 Cr+10%YoY
    2. 02Consolidated EBITDA—-8%YoY
    3. 03EBITDA Margin Impact-250 bps
    4. 04PBT₹465 Cr+10%YoY
    5. 05Group Net Profit—+10%YoY

    Segment breakdown

    India Beverages
    8% Revenue Growth
    India Foods
    14.0% Revenue Growth
    International
    9% Revenue Growth5% Constant Currency Growth
    Non-branded
    7.0% Revenue Growth
    Growth Businesses (Aggregate)
    7.0% Revenue Growth
    Sampann
    27% Revenue Growth
    RTD
    3% Volume Growth₹271 Cr Net Revenue-13% Revenue Growth
    Capital Foods and Organic India
    ₹260 Cr Total Revenue50% Combined Margin
    Organic India E-commerce
    3.5% Revenue Growth
    Non-branded Business Margins
    12% Margin22% Previous Margin
    List

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Debt

    Debt disclosed

    Liquidity

    Cash ₹400 crores

    Guidance & targets

    7
    CategoryTargetPriority
    Margin
    A&P-to-sales
    7.5%-8%
    		High
    Volume
    Growth Businesses Growth
    30%
    		High
    Volume
    NourishCo Growth
    upwards of 30%
    		High
    Volume
    Capital Foods and Organic India Growth
    30%
    		High
    Profitability
    Tea Gross Margin
    34% to 37%
    		High
    Profitability
    Consolidated Margins Improvement
    200 to 300 basis point improvement
    		High
    Revenue
    Total Value Growth
    6% to 8%
    		High

    Growth Businesses (Capital Foods, Organic India, NourishCo) Growth

    Q2, latest Q3
    Current7%
    Target30%

    Why it matters

    Achievement of this target is crucial for the company's stated strategy of deriving 30% of business from these high-growth segments.

    So yes, you should expect things to stabilize from Q2. In fact, already, we're seeing the stabilization happening in July. That's number one. Number two, 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%.

    How to verify

    key_financials.segment_breakdown[name='Growth Businesses (Aggregate)'].metrics[label='Revenue Growth']

    Risks & concerns

    5
    RiskSeverity

    Unfavorable weather impacting RTD business

    RTD business was primarily driven by unfavorable weather impacting the RTD business, the monsoon came early, leading to below-par growth. — Management acknowledged

    medium

    Transitory issues in Capital Foods and Organic India

    Impacted by capacity constraints, rightsizing of inventories, and supply chain hiccups in export and imported ingredients, though management believes these are largely resolved. — Management acknowledged

    medium

    Coffee price volatility and margin correction in Non-branded segment

    Coffee prices are in a short-term declining phase, leading to Non-branded business margins correcting from 22% to 12% due to inventory impact. — Management acknowledged

    medium

    Geopolitical tensions impacting Starbucks operations

    Reduced store timing and shutdowns in some places in North and Northwestern India due to Operation Sindhoor, though confidence in an uptick remains. — Management acknowledged

    low

    Competitive intensity in tea market

    Management believes market share cannot be won by pricing alone, and competitive movements are reciprocal, suggesting no sustained competitive advantage from pricing. — Management downplayed

    low

    Q&A highlights

    8

    “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.”

    Clarifies the impact of commodity prices on margins and the expected timeline for recovery, along with the company's pricing strategy in a competitive market.

    asked by Jay Doshi

    2 min read6 chapters

    Detailed Narrative

    01

    Overall Performance and Margin Dynamics

    Tata Consumer Products Limited reported a consolidated revenue growth of 10% to ₹4,779 crores for Q1 FY26. Despite this, consolidated EBITDA saw an 8% decline, primarily driven by a 250 bps margin impact. This decline was largely attributed to higher tea costs (160 bps) and corrections in coffee prices within the Non-branded segment. The company's PBT and Group Net Profit both grew by 10%, with EPS increasing by 12% year-on-year, benefiting from the repayment of bridge loans.

    02

    India Branded Business Performance

    The India branded business demonstrated strong underlying volume growth (UVG) of 6.8%. Core India businesses, including tea and salt, achieved double-digit growth in both value and volume. The company maintained its A&P-to-sales ratio at 7% but aims to increase it to 7.5%-8% in the short to medium term. The focus remains on expanding distribution and innovation, with new launches like green tea with L-Carnitine and renewed communication for Tata Salt.

    03

    Growth Businesses (NourishCo, Capital Foods, Organic India)

    The aggregate growth businesses, including NourishCo, Capital Foods, and Organic India, grew by 7%, falling short of the targeted 30%. This underperformance was mainly due to transitory📎 issues such as unfavorable weather impacting the RTD business, capacity constraints for Capital Foods, and supply chain hiccups for Organic India. Despite these challenges, Sampann continued its strong momentum, growing 27% and tracking an Annual Recurring Revenue (ARR) of ₹200 crores. Organic India's e-commerce revenue grew 3.5 times year-on-year.

    04

    International Business and Starbucks

    The International business grew 9% (5% in constant currency), with strong performance from the U.S. market, where coffee growth was 20%. Starbucks, the joint venture, returned to same-store sales growth in April and June, though May saw a decline due to geopolitical tensions and operational disruptions in North and Northwestern India. The company added 6 new Starbucks stores during the quarter, focusing on footprint growth across metros and smaller cities.

    05

    Strategic Priorities and Multichannel Capabilities

    Tata Consumer is actively building multichannel capabilities, with e-commerce (including quick commerce) growing 61% and modern trade growing 21%. The food services segment is gaining traction, securing tenders and successful activations with large accounts and premium hotel chains. The pharmacy rollout for Organic India is progressing well, expanding to 40 cities, and the vending business has grown aggressively, now holding a 5% share in the bean-to-cup market with 5,000 machines.

    06

    Commodity Price Trends and Outlook

    Tea prices are currently 13-15% below last year's levels and are expected to trend lower into the full season. Management anticipates tea gross margins to return to the 34-37% range by Q3, as prices normalize and re-indexing occurs. Coffee prices are trending downwards, leading to a correction in Non-branded business margins from 22% to 12%. The company expects overall consolidated margins to improve by 200-300 basis points starting from Q3 as commodity prices stabilize.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.