Tata Consumer Products (TCPL) reported strong earnings for the September quarter, largely thanks to its recent acquisitions of Capital Foods and Organic India. These moves helped offset pressures from weak consumer demand and tough competition. Overall, TCPL saw a 13% year-on-year revenue increase, reaching ₹4,214 crore. However, without these acquisitions, growth would have been much lower at just 5%.
The company’s operating profit margin improved slightly to 14.9%, which is 0.47 percentage points higher than last year but lower than the margins of the past three quarters. In India, TCPL’s beverage sales grew by 3%, but without the Organic India acquisition, they actually fell by 4% due to sluggish demand.
On the other hand, TCPL’s food business enjoyed a 28% growth, thanks to Capital Foods. Without this boost, the growth would have been only 9%. However, much of the revenue growth is due to price increases rather than an increase in sales volume.
The newly acquired businesses also contributed positively to TCPL’s overall performance. Capital Foods saw a 25% revenue increase in the September quarter, while Organic India’s revenues jumped by 45%, along with a significant rise in profit margins.
Despite the positive revenue growth, TCPL’s profit before exceptional items and tax fell by 16% due to higher finance costs and amortization expenses related to the acquisitions. However, the company has already paid off the short-term debt taken for these purchases.
TCPL’s international business also grew by 7%, with profitability improving by 53%. Tata Starbucks has become India’s largest cafe operator, with 457 stores in 70 cities. The company reported a 17% increase in revenues from modern trade and an impressive 51% growth in ecommerce sales. It is also exploring new food service and retail channels, including pharmacies, to drive future growth.
Over the past year, TCPL’s stock has risen by 22%, slightly trailing the 24% gain of the Sensex. Currently, the stock is trading at a price-to-earnings ratio of 96, supported by strong growth prospects in its emerging businesses, which make up 29% of its Indian operations.
Looking ahead, management expects margins to remain stable or improve slightly due to changes in raw material costs. They plan to implement selective price increases to manage rising input costs while keeping an eye on competition from brands like Campa Cola in the beverage sector.
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