Tata Consumer beat estimates as its newer brands and salt business grew strongly. Tea, its largest business, struggled as the whole category shrank. The shares still fell almost 3%.
Tata Consumer Products reported consolidated net profit of ₹469 crore for the September quarter, up 16% from ₹404 crore a year earlier and above analyst estimates. Revenue rose 14% to ₹5,661 crore, and EBITDA rose 18% to ₹794 crore. The EBITDA margin widened 40 basis points to 14.0%.
The India business grew volumes by 11%, its second straight quarter of double-digit revenue growth. The shares still fell about 2.8% to ₹936.5, as investors focused on weakness in tea.
Tea demand is falling
Tea is still Tata Consumer’s most important business, and it struggled this quarter. India tea volumes were flat, and tea revenue fell slightly. Industry-wide, tea volumes fell about 6%, so flat volumes mean Tata Consumer gained market share in a shrinking market.
The company has raised tea prices by 8–10% across the first two quarters to cover higher costs, and the difference between volume and value growth narrowed as those increases settled in. It is also pushing premium blends, launching Tata Tea Gold Reserve, Chakra Gold Select and Kanan Devan Gold to attract buyers willing to pay more.
Lower tea consumption is worth noting. Inflation is squeezing household budgets, and some consumers are buying less or switching to cheaper loose tea. Coffee and other beverages are also gaining ground, particularly among younger urban consumers.
Salt and newer brands lead growth
Growth came from elsewhere. Salt revenue rose 15%, a sign of how dependable that business is. The company’s “growth businesses”, including the Tata Sampann pulses and spices range, ready-to-drink beverages and newer brands, grew about 40%. Tata Starbucks, the coffee chain joint venture, also contributed higher revenue.
This shift is Tata Consumer’s long-term strategy. The company is trying to reduce its reliance on tea and become a broader food and beverage company. The growth businesses earn higher margins and grow faster, and as they become a bigger share of revenue, they lift the company’s overall profitability.
Margin targets
Management reaffirmed its target of 50–70 basis points of EBITDA margin expansion for FY27. It also set a longer-term goal of 17–20% EBITDA margins for the India business over the next three to five years, well above the current 14%.
Some risks remain. The international business, particularly Tetley in the UK, faces weak UK consumer demand. Shipping disruptions from the West Asia conflict are raising logistics costs, and coffee prices in Vietnam, where Tata Consumer sources beans, have been volatile.
For the first half, net profit rose 22% to ₹897 crore. Tata Consumer is growing faster than many consumer goods companies, but the slow decline in tea consumption is a structural challenge that it needs its other brands to offset.
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