Tata Consumer Stock Gains After Q2 Results

Tata Consumer Products Ltd. (TCPL) on October 31 declared its financial results for the second quarter of the fiscal year 2024. TCPL's consolidated net profit stood at ₹359.18 crore an increase of 1.18% YoY compared to the ₹354.98 crore same quarter of the previous financial year, and reported a 0.17% increase in profit from the previous quarter.

Total revenue stood at ₹3,733.78 crore for the quarter, an 11.02% increase from the corresponding quarter in the previous year. On a quarterly basis, revenue decreased marginally from ₹3741.21 crore. This healthy revenue growth indicates the company's ability to capture market opportunities and meet consumer demands effectively. The company reported EBITDA for the September quarter of ₹569 crores.

TCPL's gross margins expanded by 76 basis points (bps) YoY, reaching 42.5%. Its India business grew 11%  while its international business saw a growth of 13% YoY. This highlights the company's ability to effectively manage and grow its operations on a global scale. Despite the overall positive performance, TCPL reported a slight dip in market share in salt and tea.

India Growth Businesses

TCPL's India Growth' businesses, including Sampann, Soulfull, and NourishCo, showed a growth of 39% during the quarter, these businesses accounted for 18% of TCPL's India business, strong performance in these segments is a positive indicator of the company's future growth prospects.

New Product Offerings

TCPL's ability to innovate and introduce new products contributed to its growth during the quarter. New offerings, such as Tata Coffee Quick filter decoction coffee, Tetley Premium black leaf tea, and various health and wellness beverages, resonated well with consumers and added to the company's revenue.

International Operations

The international segment of TCPL's business reported a 13% revenue growth. TCPL achieved success in key markets:

UK: The revamped Tetley tea bag received a positive response, reflecting the company's strong position in this market. Also, introduced millet based muesli range, branded as 'Joyful,' in more than 430 Tesco stores throughout the United Kingdom.

USA: TCPL's brands, including Tetley and tea pigs, outpaced category growth rates, highlighting their appeal to American consumers.

Canada: Tetley continued to outperform regular tea and specialty tea categories, solidifying its position in this region.

Outlook

Sunil D’Souza, Managing Director & CEO of Tata Consumer Products, expressed optimism about the company's transformation journey into a premier FMCG (Fast-Moving Consumer Goods) company. He emphasized a commitment to sustainable growth, aligning with their recently announced sustainability targets for FY26. These targets align with their long term commitment to sustainability.

Share Performance

Following the earnings report, TCPL's stock is trading flat at ₹908.55 on the National Stock Exchange (NSE), at 1.58 pm marking a 0.56% increase from the previous session's closing price. Over the past month, the stock has increased by nearly 4%. Looking back over the last six months, it has given a 16% return. Year-to-date, the stock grew by 19%. However, if we take a broader perspective and analyze the past 5 years, the stock has delivered a 316% return to its investors.

Final words

Tata Consumer Products Ltd. has reported a strong Q2 performance, surpassing market expectations. Their financial growth, business expansion, and commitment to innovation and sustainability have contributed to their success. Despite facing challenges in maintaining market share in specific segments, the company's strategic approach positions them favorably in the highly competitive FMCG sector. As they continue on their transformation journey, TCPL remains a company to watch for those interested in the FMCG industry.