Tata Consumer Q2 results preview: Tata Group firm likely to report healthy revenue growth, net profit could fall

The Tata Group’s FMCG arm may see a fall in profitability due to higher finance costs and depreciation in its Q2 results, say experts ahead of the announcement of quarterly earnings.

Tata Consumer will announce its financial results for the July-September quarter of 2024-25 on October 18.

Tata Consumer likely to register 7-16% revenue growth in Q2FY25

According to experts, Tata Consumer Products Ltd is expected to report revenue growth of 7-16% for the September quarter. According to investing.com, TCPL will likely report revenue of ₹4,317 crore for the September quarter, reflecting a year-on-year growth of around 15%.

Revenue growth is expected to be driven by Indian food business and non-branded business. Organic growth could be seen at 7% while experts have projected a volume growth of 10-11%.

On the other hand, the Tata Group firm is expected to report a 5% decline in net profit on a year-on-year basis in Q2FY25, according to market estimates.

Focus on new business

According to experts, new businesses, such as Capital Foods and Organic India, will likely drive revenue growth in the September quarter. They expect the two new businesses to contribute around ₹320 crore to the total revenue.

IIn January 2024, Tata Consumer Products bought Capital Foods and Organic India for a total enterprise value of ₹7,000 crore. TCPL acquired a 75% stake in Capital Foods, known for brands like Ching's Secret and Smith & Jones, in an all-cash deal. The company will buy the remaining stake in the next 3 years.

Experts believe margins from new businesses remain ahead of the consolidated margins due to synergies post-integration.

Tata Consumer may post a 16% rise in Q2 EBITDA

According to experts, TCPL may post a 16% YoY growth in consolidated EBITDA. Consolidated EBITDA growth on an organic basis is pegged at 5%, driven by commodity gains and improvement in international operations.

However, the EBITDA margin is likely to drop to 13.8% in the September quarter, down from 14.4% in the year-ago period. High tea costs and a rise in overheads are likely to hit the Indian tea business.

Investors to keep a watch on revenue from segments

Investors will also focus on the company’s organic performance and its verticals like beverages and food businesses. Organic volume growth is expected to remain flat at 10% in the September quarter. However, the Indian beverage business may see a 4% YoY drop dragged by negative volumes (3%) in the tea segment, as per experts. Nourish Co is expected to post a 4% growth.

India foods business revenue growth is pegged at 14% YoY, driven by Sampann and Soulfull volumes. The salt business is expected to grow by 6.5% YoY.

Experts say international business is likely to expand at 6% YoY in CC terms, with improvement in its margins. Non-branded segment is likely to grow 25% YoY on the back of high realisation in coffee.

TCPL posted 16% revenue growth in Q1FY25

Tata Consumer reported a 16% YoY growth in revenue from operations for the June quarter of FY25 at ₹4,352 crore. Consolidated EBITDA for the quarter was at ₹671 crore, up 23%.

Profit before exceptional items for the June quarter stood at ₹465 crore, down 6% YoY.

TCPL’s organic growth, excluding acquisitions (Capital Foods and Organic India), was 10%. An improvement in operating performance was more than offset by finance costs and amortisation charges. India Beverages' business revenue grew by 6% while coffee posted revenue growth of 28% for the quarter.

Tata Consumer Products share price

Tata Consumer Products shares remained under pressure on Thursday ahead of the Q2 results. The Tata Group company’s shares dropped as much as 2.3% to hit an intraday low of ₹1,087.65 apiece on the NSE on Thursday.

The FMCG stock has dropped over 2% in the last five sessions and more than 10% in the past month.