Tata Consumer Products Limited

Tata Consumer Products delivered a robust Q4 FY26, with consolidated revenue growing 18% to INR5,400 crores. For the full year, the company successfully crossed the INR20,000 crore mark, achieving 15% revenue growth. Consolidated EBITDA saw a 27% increase in Q4, leading to a 100 bps margin expansion to 14.6%. The full-year EBITDA growth stood at 12%, with a margin of 13.9%, and the company reported an adjusted EPS of INR17.3.

The company's strategic 'growth businesses' demonstrated strong momentum, crossing INR4,000 crores in revenue for the full year with a 24% growth rate. In Q4 alone, these businesses grew 33%, with Sampann leading the charge with 69% growth. RTD (Ready-To-Drink) also showed significant progress, with 28% volume and 23% revenue growth in Q4, totaling INR260 crores. Management expressed confidence in these growth categories continuing to expand at a 30% rate in the near to medium term.

Tata Consumer maintained a strong focus on innovation, launching 80 new products in FY26, effectively doubling the previous year's count, and achieving an innovation-to-sales ratio of 4.5%. The company completed the rollout of its new go-to-market system, significantly expanding its distribution reach. Modern trade contributed 15% to India business revenue with 20% growth, while e-commerce and quick-commerce channels saw a 62% increase, contributing 19% to the total.

Despite some increases in packaging and LPG costs, management is confident in mitigating margin pressures through strategic price increases. The company aims for a 50-80 bps EBITDA margin expansion for the full year. Tea prices were noted as largely benign, trending about 5% ahead of last year, while coffee prices were coming down, with Arabica trading at $2.99. The A&P-to-sales ratio is expected to normalize^📎 to 7.5-8.5% going forward^⏳, after being slightly soft this quarter due to front-loading in Q2/Q3.

The international business recorded 21% growth in Q4 and 16% for the full year, with the U.S. coffee business growing 20% in Q4 and 43% for the full year. However, exports faced temporary disruptions in March due to Middle Eastern geopolitical issues, impacting Capital Foods and Organic India. The salt category continued its stellar performance, with 12% revenue growth for the full year and a 100 bps increase in market share, driven by portfolio diversification and strong brand equity, with Tata Salt having an 88% top-of-mind recall.

The company maintains a healthy financial position with approximately INR3,000 crores in net cash. The Board recommended a dividend of INR10 per share, reflecting strong shareholder returns. While management remains open to attractive acquisitions, they are selective, noting that 'what we like is not for sale, what is for sale, we don't like.' Capacity expansion projects are underway for the Vietnam plant, expected online by early 2027, and for tea extracts, indicating continued investment in core and growth areas.