Tata Consumer Products Limited (TATACONSUM)

Q4 concall
Performance
India Beverages, as I mentioned, volume growth of 3%; revenue, 8%

India Foods, volume 8%, revenue 26%.

US Coffee, volume was negative 20% (due to price hike) overall revenue was up 6%

International, ex acquisitions, volume growth, 3% and revenue growth ex acquisitions of 6%.

Tata Coffee 14% volume and 16% revenue.

Overall, consolidated constant-currency growth of 12%; reported, 14%.

Update

India Business EBITDA margins expanded by 90 bps during the year despite inflation in salt.

Free cash flow conversion from EBITDA was close to 99% (OFC/EBITDA)

At the company level, the EBITDA margin contracted by 50bps in FY23, led by steep inflation in the International business

the target was to hit 4 million outlets by September of ’23. We are at 3.8 million as of March,

Alternate channels
Modern Trade FY23 revenue growth 21%
E-commerce FY23 revenue growth 32%

Tea Market share in volume terms we were down 50 bps, value we were down 113 bps.

During the year, we gained market share in salt,

We have roughly doubled our launches compared to last year. And it’s not only foods and beverages, it is new categories including expanding Himalayan, and entering the protein space.

New engines of growth, moving beyond tea and salt, focus on Sampann, ready-to-drink, Soulfull, and the ready-to-eat, ready-to-cook portfolio.

Soulfull doubled in revenue last year.

Tata Sampann full-year growth being 29%.

RTE/RTC, we are slightly behind on our timelines, but now the international expansion, which is key on this business has picked up.

Starbucks, scaling rapidly tenth year. we crossed the INR1,000 crore mark. We added 71 stores, which is a record for Starbucks. We are now in 41 cities and 333 stores now nationally.

Salt volume growth of 8% and revenue growth of 26%, market share was 76%.

NourishCo, 80% revenue growth and Tata Copper is 2.2 times of its size.

Tata Coffee overall growth 11%

Q&A
International buz margin will come back to the historical level comming q1 or q2 due to increasing price and structural cost action

in Tea buz we are weaker in the South, stronger in the North

1.5 million direct distribution (outlets) as of now
total reach 3.8m target 4m by sep23

ebitda margin in starbugs

historical gross margin in salt buz between 32 to 37 % and we are more or less in the rage right noe

we do expect both tea and salt businesses to grow mid-single digits in volumes.

NourishCo side 3 year back presence in orissa andhra telengana and tamil nadu if u see now we are preset in 75 to 80% of the country
180 cr to 600 cr in three years targeting 4 digit revenue by 24 and focusing of expandig distribution
We expanded manufacturing footprint by 2x to 2.5x last year

So Starbucks according to Ind AS reporting, we are EBITDA positive and EBIT positive and statutory reporting according to that, the net PAT is negative.
rapidly expanding stores interest and depreciation front.

NourishCo we have two different distribution systems. One is the value and one is the premium end
The value portion is primarily the Tata Copper and Gluco Plus.
The premium end handles the Himalayan part of the portfolio, which is very specifically targeted to high-end on-premise accounts.

As crop goes up or down and prices go up or down we will keep moving our prices to make sure that, A, we are competitive; B, we are delivering margin; and C, we’re continuing to drive volume
growth and market share.

what would be the drivers of this margin improvement in indian business
EBIT margins would be driven primarily by volume growth while keeping costs under tight control
salt kind of margin improvement, if the RM Index goes down

Indian tea business
we are about 10% to 12% behind on distribution and also on market share (while comp to large comp)
we have to close this distribution gap by 10% increasing distribution
rural Tamilnadu.
Eastern UP
some parts of Maharashtra
by September

9 Likes

Co. seems to be talking very less about Starbucks. They don’t disclose about it much in the quarterly reports. Even in a 300 page annual report, they gave only 1 page space for details and future plans for the growth. Not sure if they are really interested in growing that business.

3 Likes

delisting of GDR’s.

Investor presentations 4bed82d6-39d0-46d7-9e97-dcc0460a0a27.pdf (5.1 MB)

organic india: Tata Consumer, ITC among companies keen to buy into Fabindia-backed Organic India - The Economic Times (indiatimes.com)

This shows that Tata Consumer will continue to focus on inorganic growth as a driver going forward. Their recent few previous buys, they have been able to expand range of products and distribution after acquisition.

1 Like

Grover said the saffron launch is under the Himalayan umbrella - in line with the strategy of strengthening provenance positioning, with products which are gold standard, source-based (from the Himalyan belt) and minimally processed. Initially, it will test waters by making it available in select cities.
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Kashmiri saffron is considered premium and priced between Rs 550-800 per gm, while Iranian saffron sells at a lower price, industry experts say. The Kashmiri saffron market is estimated to be worth Rs 500 crore, and is highly fragmented with no large player. Others in the space include Baby Saffron, Lion and Everest - which cater to the lower-priced segment.
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Recently, prices of Kashmiri saffron have jumped after receiving the geographical indication (GI) tag, which verifies the spice’s origin.

2 Likes

I checked the ratios.
ROE and ROCE both are less than 10%.
Div yield 0.9%. PE: 70!!
Sales growth in last 3 years, 13%.
Company has good brand and pricing power.
brand has tata name with 80 thousand crore market cap.
but, why the growth is so less?

1 Like

Growth is still better than other FMCG companies. IF you look at their high growth business e.g. nourishco, soulful,pulses etc. you will realise that business has high growth potential. No doubt it is over valued and it is tough to get exponential returns but long term story is still intact.

1 Like

Tata Consumer leads race to buy controlling stake In Fabindia-backed Organic India (moneycontrol.com)

They are also into the race for acquiring Ching’s Secret as reported by some channels. To chase two large acquisitions at the same time is extremely ambitious and particularly dicey. Last few years the acquisition of soulful or full stake in the Pepsico JV were smart and smaller. However this organic India buy is repeated every few months.

Need to see how this will play out.

Disclosure - Largest Position in the PF.

5 Likes

Tata Consumer Products on January 12 said it will be buying 100 percent stake in Capital Foods, which markets its products under Ching’s Secret and Smith & Jones brands, for Rs 5,100 crore in an all cash deal.
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The FMCG company added that 75 percent of the equity shareholding will be acquired upfront and the balance 25 percent shareholding will be acquired within the next three years.
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Ching’s Secret is a market leader in Desi Chinese across its product categories - Chutneys, Blended Masalas, Sauces and Soups. Smith & Jones is a fast-growing brand catering to in-home cooking of Italian and other western cuisines.
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Tata Consumer said this acquisition will enable it to expand its product portfolio and further strengthen its pantry platform. The overall size of the categories in which Capital Foods operates in is estimated at Rs 21,400 crore.
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The founder of the company holds 9.45 percent in the company while the rest is held by private equity funds General Atlantic and Artal Asia. Ajay Gupta is the founder of the company.
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Estimated turnover of Capital Foods for FY24 is approximately Rs 750 to Rs 770 crore. The same was Rs 706 crore in FY23, Rs 574 crore in FY22 and Rs 667 crore in FY21.

11 Likes


Tata consumer changes alot from just tea and salt brand, long way to go

5 Likes

So two large acquisitions as expected by the market. Key Aspects i wanted to analyse and drive deeper.

Chings Secret is bought out at 5100 Mcap with approx. 150 cr Ebitda for 2024. Thats 32-34x editda multiples. Looks fair but depends on TCPL to turbocharge growth by pumping the products across its distribution network.

Organic India not yet sure what to make of it. Will take a year to figure out. Overall not excited by the portfolio.

2 Likes

Can someone figure out what the exceptional expenses for the quater.