Earnings Outlook
Tata Consumer Products Apr-Jun PAT seen up 15% YoY
This story was originally published at 06:00 IST on 17 July 2024
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By Avishek Rakshit
KOLKATA – India's second largest tea retailer Tata Consumer Products Ltd is expected to report a 15.3% year-on-year growth in its consolidated net profit for the quarter ended June to 3.7 bln rupees, according to the average of estimates from six brokerages. Consolidated revenue is expected to increase by 16.7% year-on-year to 43.7 bln rupees.
Sequentially, the net profit is seen rising 68.5% and revenue is seen increasing by 11.2%. The company reported a net profit of 3.2 bln rupees in the year-ago period and 2.2 bln rupees in the Jan-Mar period. The revenue in the year ago period was 37.4 bln rupees and a quarter ago it was 39.3 bln rupees.
Among the brokerages, Nirmal Bang Equities estimated the company's net profit the highest at 4.4 bln rupees and Nuvama Wealth Management the lowest at nearly 3 bln rupees. The revenue estimate of Nirmal Bang Equities was also the highest at 44.9 bln rupees and that of Sharekhan was the lowest at 41.6 bln rupees.
Tata Consumer Products is yet to decide on the earnings announcement date.
In a report, Nuvama Wealth Management said that Tata Consumer Products' like-to-like revenue, which omits the sales from recent acquisitions, would grow 9%. The company's beverages business in India is expected to register 4% sales growth albeit a flat volume growth. The brokerage said that out-of-home consumption was impacted due to harsh summers and a high comparable base in the year-ago period.
Kotak Institutional Equities, however, said that although there could be a negative impact on sales because of the harsh summers, it had helped boost sales of the NourishCo brand of cold beverages which registered 14% sales growth.
Nuvama Wealth Management said that the company's domestic foods business is expected to grow by 13% in revenue terms and by 9% in terms of volume. The salt brands, where the company enjoys a leadership position, will clock volume growth of about 7%, Nuvama Wealth Management said. Salt business performed well during the Apr-Jun period as price increases were completely absorbed by the consumers and new launches did well, the brokerage said.
KR Choksey Research said that the revenue growth will be aided by strong performance in the domestic foods and beverages business and tea segment globally.
The company's performance in the global markets is expected to be in line with analyst expectations. Some sector analysts projected an 11% revenue growth for Tata Consumer Products from its global operations. Businesses in the UK and Canada have seen strong volume growth and coffee in the US has turned positive by volumes and sales both, Nuvama Wealth Management said.
Tata Consumer Products is expected to report earnings before interest, tax, depreciation, and amortisation of 6.8 bln rupees, according to the average of estimates from five brokerages. The EBITDA is seen in the range of 6.3-7.2 bln rupees.
Kotak Institutional Equities said that the company's gross margin is expected to expand by 445 basis points year-on-year and by 50 bps sequentially to 46.6%. The primary reasons for this is lagged impact of pricing interventions in international markets, softening raw material costs, favourable commodity price movements, and consolidation of margin-accretive acquisitions.
The EBITDA margin, Kotak Institutional Equities said, is expected to expand by 60 bps to 15.2%, led by higher profitability in international and non-branded businesses, and partly offset by some decline in its domestic business.
Today, shares of Tata Consumer Products closed 2.4% higher at 1,176.25 rupees on the National Stock Exchange.
Following are the Apr-Jun earnings estimates of Tata Consumer Products based on reports compiled by Informist from six brokerage houses:
Broker Name | Net Sales (in million rupees) | Net Profit (in million rupees) | EBITDA (in million rupees) |
Kotak Institutional Equities | 44,265.00 | 3,148.00 | 6,714.00 |
KR Choksey Research | 43,685.00 | 3,676.00 | 6,815.00 |
Motilal Oswal Financial Services Ltd | 44,347.00 | 3,854.00 | 6,776.00 |
Nirmal Bang Equities Pvt Ltd | 44,881.00 | 4,428.00 | 7,181.00 |
Nuvama Wealth Management Ltd | 43,122.00 | 2,951.00 | 6,330.00 |
Sharekhan Ltd | 41,630.00 | 3,850.00 |
|
Average | 43,655.00 | 3,651.17 | 6,763.20 |
End
Edited by Ashish Shirke
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