Tata Consumer stock plunges 10% on meek profit, margin growth in Q2

Tata Consumer Products shares fell 9.77 per cent to hit an intraday low of Rs 986.35 per share on the NSE on Monday. The stock slipped 7.08 per cent to close at Rs 1,015.90 apiece.

The stock price slumped after the fast-moving consumer goods (FMCG) major reported a sluggish margin and profit growth in the second quarter of the current financial year (Q2FY25).

Tata Consumer Products reported a 1 per cent year-on-year (Y-o-Y) increase in its group net profit reaching Rs 367 crore in Q2FY25. The company’s earnings before interest, tax, depreciation and amortisation (Ebitda) came in at Rs 629 crore, with Ebitda margins contracting 30 basis points Y-o-Y to 14.9 per cent in Q2FY25.

 

Despite slowness on the profit and margin fronts, the company's revenue rose 13 per cent Y-o-Y to Rs 4,214 crore, driven by the contributions from its recent acquisitions of Organic India and Capital Foods. Excluding these acquisitions, sales growth stood at 5 per cent. 

In its India business, the beverages segment saw a 3 per cent revenue increase, though this figure drops to minus 4 per cent without Organic India, as the category faced a subdued demand environment. 

The coffee business continued to perform well, with revenue growing by 29 per cent during the quarter. The India foods segment's revenue grew by over 28 per cent (or 9 per cent excluding Capital Foods). In particular, the value-added salt portfolio expanded by 26 per cent, with rock salt achieving record volumes.

The Tata Sampann portfolio also maintained strong momentum, recording 26 per cent growth for the quarter. 

Sunil D’Souza, managing director and CEO of Tata Consumer Products, noted the company's continued growth and market share gains in the India salt business, as well as strong performance from Tata Sampann and Tata Soulful, though the India tea business was impacted by broader category trends.

D’Souza highlighted that the integration of Capital Foods and Organic India has been completed, resulting in synergy benefits, with both businesses seeing strong quarter-on-quarter growth. Additionally, Tata Starbucks achieved the milestone of becoming the largest café operator in India by store count, with 457 stores across 70 cities.

The company also reported a significant growth in future-focused channels, with its e-commerce platform growing by 51 per cent and modern trade registering 17 per cent growth. Tata Consumer Products is exploring new growth opportunities through channels such as food services/HoReCa and pharmacies, with pilot programmes underway.

Internationally, Tata Consumer Products' revenue grew by 7 per cent (5 per cent in constant currency), with a marked improvement in profitability, driven by strong performance in the UK and earlier structural interventions.