Analysts expect Tata Consumer Products to report 12.9% revenue growth and a 14.4% rise in net profit, driven by Sampann, NourishCo and Soulfull despite pressure from higher tea costs.
Tata Consumer Products is expected to post another quarter of solid growth when it reports results on Monday, October 26, with analysts projecting that the packaged-foods and beverages group will benefit from its faster-expanding brands outside its core tea and salt businesses. Zee Business research suggests revenue for the quarter ended September 30 rose 12.9% from a year earlier to Rs 5,605 crore, while net profit climbed 14.4% to Rs 462 crore.
The same preview indicates earnings before interest, tax, depreciation and amortisation, or EBITDA, should increase 15.3% to Rs 774 crore, with margins improving by 30 basis points to 13.8%. That would reflect a combination of operating leverage and tighter cost control. Cofacto Research also expects margin expansion, but notes that tea procurement inflation remains a factor investors will watch closely, as it can weigh on profitability in a business that still relies heavily on commodities.
Investor attention is likely to focus on the company’s growth portfolio, which includes brands such as Sampann, NourishCo and Soulfull. Zee Business estimates the growth business increased 30%, while the India food business rose 11%. It also expects flat volumes in the domestic tea division, 13% growth in the salt business, 35% growth in Sampann and 30% volume growth in NourishCo. Business Standard said earlier in the year that these growth segments had helped sustain revenue momentum, while Cofacto’s analysis of the previous quarter pointed to continued strength in the India branded business.
Tata Consumer’s earlier results suggest the company entered the second quarter with decent momentum. Livemint reported that in the comparable quarter last year, the company beat estimates with net profit of Rs 397 crore on revenue of Rs 4,966 crore, while EBITDA came in at Rs 672 crore and margin at 13.5%. Shares in Tata Consumer have fallen this year, though analysts quoted by Zee Business described the stock as one to watch rather than a clear buy at current levels.
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