Tata Consumer Products Limited (TATACONSUM)

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272

Hi,

Thanks for your reply.

Let’s say I have bought 50 RE traded shares than I need to apply for 50 rights shares through Entitlement process? And what happens if I dont get entitlement any shares?

And by when I need to sell these RE traded shares? Is it on or before 16th of August assuming 19th Aug is last date of the process?

Regards,
Deb

273

Hi

  1. RE = Rights Entitlement. For every RE that you own, you are eligible to buy one share of Tata Consumer - and you will receive allotment
  2. Please note that to buy the share you now need to pay the Rs 818. So if you have bought 1 RE for say Rs 370, your total acqusition price is Rs 818+370 = Rs 1188. As you can see that at RE price of Rs 370, there is very little difference between rights through purchased RE and market price
  3. You can sell you RE - but the last day for trading is 12-08. If you do not sell your RE by then, you either have to put up the additional Rs 818 per share by 19-08 to acquire the share or you will lose the money you have spent on buying the RE.

Here is a link with the dates

Good luck

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274

I am trying to understand how to think about the benefit to existing stock in this Rights Issue.
If yesterday’s stock price was 1205 and the Rights issue was 818. Should we think we got a discount of 387 rupees per share?

280

I have a question on rights issue. Once rights shares are credited to dmat - will they trade like normal/original shares or they will be traded separately with other code

281

The rights entitlement was credited as soon as the process is launched and it was trading at CMP - 818. Now the issue window being closed, for those who have applied, new shares will be credited this week and will trade as a normal share at CMP. If you haven’t applied those rights entitlement will be extinguished

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282

Thanks, so this means once the rights shares are finally listed, they will be just like ordinary shares? When we sell shares, how will it be determined if we are selling original shares or shares acquired via rights? (As this would be crucial to determine cost & date of acquisition). Thanks!

293

Tata Consumer shares slumped following the release of its Q2 results

  • The India Beverages segment reported a 3% decline in revenue and a 4% drop in volumes, driven by softer market demand, impacting overall performance.
  • The ready-to-drink business, although fast-growing, faced challenges from competitive pricing pressures and unfavorable weather conditions.
  • Growth businesses posted a 15% rise, while the tea business struggled due to subdued category trends.
  • Group net profit rose 1% year-on-year (Y-o-Y) to Rs 367 crore.
  • EBITDA stood at Rs 629 crore with margins contracting by 30 bps to 14.9%.
  • Revenue grew 13% Y-o-Y to Rs 4,214 crore, boosted by acquisitions of Organic India and Capital Foods (excluding these, growth was 5%).
  • Coffee business posted 29% revenue growth, while the India foods segment grew 28% (9% without Capital Foods).
  • Strong performance from Tata Sampann (26% growth) and record volumes in rock salt.
  • Tata Starbucks became India’s largest café operator with 457 stores.
  • E-commerce grew by 51%, and modern trade by 17%.
  • International revenue increased by 7%, with improved profitability in the UK.
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294

Only Headwind company faces is the competition from Campa-Cola in the RTD business. Company has been forced to reduce margins.

Have not looked at full concall. Will post thoughts then. But today’s movement makes no real sense to me.

Beverages will bounce back in couple of quarters. Coffee is doing good. India foods can do much better but is solid.

What has really changed in last quarter that stock is down 15-20% from highs is something to look at.

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295

Q2 FY25 P&L Performance Summary

  • Consolidated revenue grew 13% year-over-year (YoY) to Rs 4,214 crores, with a 12% increase in constant currency terms. The India business, comprising 70% of total branded business revenue, grew 15% overall but only 2% organically. This suggests that growth in the India business was primarily driven by acquisitions.
  • Group net profit (GNP) before exceptional items grew 3% YoY to Rs 388 crores. This is a slower growth rate than the 11% YoY increase in EBITDA to Rs 629 crores. The slower growth in net profit is attributed to higher interest costs and amortization due to recent acquisitions.
  • Profitability in the international business (29% of branded revenue) improved significantly, with profit growing 53% YoY. Growth businesses, excluding recent acquisitions, grew organically by 15%.
  • EBITDA margin for the quarter contracted 30 basis points to 14.9%, driven by higher input costs in the India tea business. This is a reversal of the 30 basis point margin expansion observed in the first half of the fiscal year.
  • Standalone net profit for Q2 FY25 declined 14% YoY to Rs 223 crores. This is likely due to the higher exceptional costs incurred in the quarter.

Overall, the latest quarter results show a mixed picture. While topline growth remains strong, driven by acquisitions and international business performance, profitability has weakened due to margin contraction in the India business.

Disclaimer: Invested and Biased. Less than 5% of PF. No transactions in the last 30 days. Post purely for study purposes. Consult your advisor before any investment decisions.

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296

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

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