India business momentum continues
Tata Consumer Products Ltd (TCPL) is a leading Tata Group company, with presence in the food and beverages business in India and internationally. It is the second largest tea company globally and has significant market presence and leadership in many markets.
Key Highlights
In Q3FY25, consolidated revenue grew 16.8% YoY (+9% organic growth) to Rs. 4,444cr, driven by robust performance of the India business.
The India business grew 19.3% YoY to Rs. 2,834cr due to robust double-digit growth in the domestic tea business, supported by strong volume growth, and continued momentum in the domestic salt business as well as strong growth in Tata Sampann, with 10% organic growth in India..
Meanwhile, the international business grew 16.0% YoY to Rs. 1,192cr, including the export sales of Capital Foods and Organic India, due to structural interventions in markets such as the UK and Canada, and the benefit of high commodity prices, with a 35% YoY profitability growth .
However, EBITDA decreased 1.3% YoY to Rs. 565cr and margin contracted 230bps YoY to 12.7%, primarily due to tea margin pressure.
OUTLOOK & VALUATION
TCPL delivered strong financial performance in Q3FY25, driven by robust growth in the India business, particularly in food and beverages. The company’s diversified portfolio, including leading brands such as Tata Tea, Tetley and Tata Salt, positions it well for long-term growth. Additionally, the company’s focus on innovation, premiumisation and expansion into new channels, such as food services and pharma, is expected to drive growth. The company’s ability to leverage the Tata brand in consumer products, combined with its strategic acquisitions, further strengthens its position in the consumer market. Therefore, we upgrade our rating to BUY from HOLD on the stock, with a rolled forward target price of Rs. 1,067, based on 49x FY27E adjusted earnings per share.
