Tata Consumer Products -
Q2 FY 25 results and concall highlights -
Revenues - 4214 vs 3734 cr, up 13 pc
EBITDA - 629 vs 569 cr, up 11 pc ( margins @ 14.9 vs 15.3 pc YoY )
PAT - 367 vs 364 cr ( due steep jump in amortisation costs, lesser interest income - due acquisition of Capital Foods and Organic India in Jan 24 )
Cash on books @ 332 cr
Company had acquired capital foods ( having brands like - Ching’s Secrets and Smith and Jones ) for 5100 cr + Organic India for 1900 cr respectively in Jan 24
Have launched new products in the recent past like - Soulful branded - Rusks, Muesli, Corn Flakes, Premium + Healthy biscuits, Tetley branded - Kombucha, Tata Grand branded - cold coffee ( ready to drink ), Ching’s branded - green and red chilli sauces, Tata Sampann branded - Dates, Anjeer, Hing, Cumin seeds, coriander seeds, funnel seeds, Tata Tea - Chakra Gold
Segment wise performance -
India business -
Organic India + Capital foods - clocked revenues of 102 + 206 cr in Q2 ( combined growth of 31 pc on a QoQ basis ). Both these businesses are margin accretive for the company
Tata salt - grew 2 pc YoY with flat volume growth
Tata Sampann - recorded 26 pc YoY growth
Tata Tea - recorded 3 pc YoY decline with 4 pc decline in volumes
Ready to drink portfolio - de-grew by 11 pc and recorded sales of 154 cr. Tata Copper however grew by 6 pc
Non - Branded business - grew by 19 pc due exceptionally strong coffee prices
Tata Starbucks JV - revenues grew by 2 pc. Added 19 new stores in Q2 taking the total store count to 457
UK business - grew by 7 pc. UK business witnessed strong margin improvement driven by structural interventions, topline growth
US business - grew by 3 pc. Tea and Coffee business in US grew by 2 pc and 6 pc respectively
Canada business - de-grew by 2 pc
Erratic weather patterns caused extreme input cost inflation in tea and Salt businesses ( due excessive rains at Mithapur which resulted in company resorting to buy brine from third party sources ). Coffee business also continues to face headwinds due record high coffee prices
Company has taken some prices in the Tea portfolio but have not passed on the entire hikes
Category wise breakdown of revenues -
India foods business - 1368 cr, up 29 pc ( organic growth was 9 pc )
India beverages - 1380 cr, up 3 pc
International business - 1000 cr, up 7 pc
Unbranded - 500 cr, up 19 pc due strong Tea and Coffee prices
Company finished its rights issue in Q2 and became Debt free by end of Q2
Company has automated the replenishment systems at the distributor level where in the fresh orders are calculated as - system generated forecast minus the current inventory with the distributors
GT continues to see softness. Modern trade grew by 17 pc and E-Comm grew by 50 pc in Q2
Company has started to roll out its products in the HoReCa and Pharma channels wef Q2
A&P spends in Q2 stood @ 7.5 pc ( healthy levels )
Some brands in the base business that showed strong YoY growth in Q2 were - Sampan ( up 26 pc ), Rock Salt ( up 25 pc )
The reach of Capital foods at the time of acquisition was 2.5 lakh outlets. Tata Consumer has expanded that to 5 lakh outlets now
Tetley is now the No 2 branded Tea player in UK
Company believes they have enough space to build brands above and below the standard Tata Salt. They are working on and getting good response from the market wrt their premium offerings like - Rock Salt, Iron fortified Salt, Zinc fortified Salt ( Immuno ), Panch Tatva. In South India, they ve launched Tata Suddh which is also seeing good traction
Brands that the company is trying to pitch @ the HoReCa channel include - Tata Salt, Sampann Pulses, Ching’s sauces + planning to launch Mayonnaise
Seeing very strong demands for some of the Organic India’s products like - Organic Jaggery, Organic Ghee and Organic Rock Salt
Because of launch of Campa Cola at a disruptive price point, company’s Tata Gluco + ( avlb in 4 flavours ) did come under some stress. Company has taken the necessary pricing actions to counter the same. They did admit that they were slow to react. In addition, they have revamped the packaging, taste, format, flavour of the Tata Gluco+ range wef late Oct
Because of sharp hikes in Tea prices, the unorganised players should start to feel the heat ( sooner rather than later ) and should result in mkt share gains for organised players
The annual amortisation figure for FY 25 for the company ( because of 2 large acquisitions ) should be around 200 cr
Tata Starbucks did see tepid performance in Q2 - in line with tepid performance for the entire QSR industry. However, beginning Oct, festive season had started. That should be a positive factor the Starbucks business and help in the recovery
Company doesn’t disclose segment wise margin. However, they did concede that Sampan’s margins have trended up YoY in Q2 ( Sampan’s margins are about to reach double digits and company feels there is no reason for them to not trend higher )
Tata Copper + and Nourish Co are clocking annual sales of aprox 340 cr and 510 cr respectively
Company believes, they have a long way to go when it comes to company level margins ( of around 14-15 pc ). They r at the lower end of FMCG industry and intend to keep moving higher - YoY
Disc : initiated a tracking position, I expect a mean reversion in overall demand scenario in the country which may cause a rebound in stock price, biased, not SEBI registered