Tata Consumer

Tata Consumer reported a robust Q3 FY26, with consolidated revenue growing 15% to ₹5,112 crores, marking a landmark quarter. Consolidated EBITDA increased 26%, leading to a 120 bps year-on-year margin expansion to 14.2%. This growth was broad-based, with India, International, and Non-branded businesses all delivering double-digit revenue growth, showcasing strong underlying business momentum.

The India branded business posted an impressive 15% underlying volume growth. The Salt segment had a strong quarter, with 14% revenue growth and 15% volume growth, driven by targeted consumer and trade promotions. India Tea saw 3% volume growth in Q3, with a year-to-date growth of 9%, aligning with the company's mid-to-high single-digit guidance for the tea business. The company is actively passing on lower tea prices to consumers.

The 'growth businesses' segment, encompassing Tata Sampann, Ready-to-Drink (RTD), Capital Foods, and Organic India, demonstrated exceptional performance. This segment grew 29% and contributed 30% to the total revenue, surpassing ₹1,000 crores in quarterly revenue. Tata Sampann recorded a strong 45% growth, entirely volume-driven, with its dry fruits and cold press oils businesses achieving annual run rates of ₹250-300 crores and similar figures, respectively. RTD delivered a 26% volume-driven growth, generating nearly ₹200 crores in net revenue for the quarter.

The national rollout of the new GTM model is 82% complete and is expected to be fully implemented by the first week of February. This initiative involves transitioning 270 distributors and adding 160 new ones, with a focus on aligning routes and servicing norms using AI. The company's innovation pipeline remains robust, with 15 new product launches in Q3, bringing the year-to-date total to 55, and the innovation-to-sales ratio stands at 4.8%, nearing the target of 5%+.

The International business maintained a strong trajectory with 11% constant currency revenue growth, primarily driven by US coffee. The US business saw 31% revenue growth, fueled by both volume and pricing. Tata Starbucks reported a second consecutive quarter of 3% same-store sales growth, opening 12 new stores in Q3 to reach a total of 504 stores across 81 cities, with a continued focus on adapting its business model to Indian consumers.

Consolidated EBITDA margins expanded by 60 bps quarter-on-quarter and 120 bps year-on-year to 14.2%. Management anticipates exiting Q4 FY26 with EBITDA margins in the 14.5%-15% range, which is considered a normative level. While international margins were impacted by US coffee costs, a recent price increase in January is expected to normalize them within the next quarter. The long-term target for the India Foods business is an EBITDA margin of 17% or more.

Capital Foods showed month-on-month improvement, though its Q3 performance was affected by US tariffs on international exports, which constitute 20% of its business. Management is actively accelerating advertising and sampling efforts, particularly in the South and East, and leveraging the new segmented GTM strategy to drive growth. Despite challenges, Capital Foods and Organic India combined grew 15%.