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Informist, Friday, Oct. 31, 2025

 

By Avishek Rakshit

 

KOLKATA – Healthy volume growth in tea, salt and foods business is expected to lead Tata Consumer Products Ltd. to report one of the strongest revenue growth in the consumer goods industry in the September quarter. However, its operating margins are expected to fall marginally as the company is likely to have increased its spends on advertisements and promotions in an increasingly competitive environment. Also, the benefits of higher tea margins in India are likely to be offset by some pressure on coffee margins in the US.

 

India's second-largest tea retailer by value and volume, which is scheduled to detail its financial results for the September quarter on Monday, is expected to see an uptick in domestic tea sales, which is likely to boost the domestic revenue. Although Tata Consumer does not directly declare the contribution from its tea sales in India to its overall revenue, sector analysts estimate it to be as high as 22-25%.

 

The beverages category in India, of which tea is a part, continues to remain the main revenue earner for the company despite its increasing focus on building a strong foods and pulses category. Global sales, majorly in the US, UK, and Canada, comprise 25% of its annual revenues.

 

The September quarter top line of Tata Consumer is expected to rise nearly 13% on year to INR 47.7 billion, according to the average of estimates from 10 brokerages. On a sequential basis, the company's revenue is expected to decline by a very thin margin. The highest estimate for revenue is INR 48.6 billion by Nuvama Wealth Management Ltd. and the lowest is 46.8 billion Nirmal Bang Equities Pvt. Ltd.

 

Tata Consumer's bottom line for the September quarter is expected to decline over 22% on year but rise 9% sequentially to INR 3.6 billion. The highest estimate for net profit is INR 4.2 billion from Nomura Equity Research and the lowest is INR 3.3 billion from YES Securities (India) Ltd. 

 

Nuvama expects Tata Consumer's domestic tea business to report volume growth of 4% on year, while the value growth is expected to be steeper at 11% on year. Overall, beverages sales in India are projected by Nuvama to increase 10% on year.

 

Kotak Securities Ltd. pegged the volume and value growth for the domestic tea business higher at 6% and 12%, respectively. Part of the projected volume growth in the September quarter is on account of the 3-4% price cuts Tata Consumer took owing to falling procurement costs of tea and to remain competitive. Not only does Tata Consumer face competition from the country's largest tea retailer, Hindustan Unilever Ltd., but tea brands like the Goodricke group, which owns its plantations, also pose as serious competitors. Moreover, organised tea retailers like Golden Tips have been on an aggressive expansion mode in east India.

 

The company's domestic foods business, which comprises salt, pulses, spices and other products housed under the Sampann brand, is expected to grow 20% on year in revenue terms, according to sector analysts.

 

Although sales in the UK are expected to remain soft, Tata Consumer's international business is likely to grow 4% on year in revenue terms owing to strong performance in the US, South Africa and Canada.

 

Tata Consumer's non-branded business is projected to grow 12% on year due to the recent run-up in Robusta coffee prices leading to higher realisations and mark-to-market prices. The latter is a daily accounting process for calculating and settling profits and losses on open futures or options contracts prices. On account of these factors. Nuvama expects Tata Consumer's consolidated earnings before interest and tax margins to expand by 600 basis points on quarter to 18%.

 

However, increased spends on advertising and deleverage is expected to result in flat EBITDA growth, JM Financial Institutional Securities Pvt. Ltd. said. Tata Consumer's earnings before interest, tax, depreciation, and amortisation is expected at INR 6.3 billion for the September quarter, according to the average of estimates from nine brokerages. The EBITDA estimates range between INR 6.5 billion by Kotak Securities Ltd. and INR 6.1 billion by brokerage Nirmal Bang.

 

On Friday, shares of Tata Consumer ended at 1% lower at INR 1,165 on the National Stock Exchange. The shares are up over 8% since the company announced its June quarter earnings in July.

 

Of the 17 research reports on the company available with Informist, 16 have a 'buy' rating on the stock at an average target price of INR 1,247. One brokerage has a 'hold' rating on the scrip.

 

Following are the Jul-Sept earnings estimates for Tata Consumer from 10 brokerages in descending order of the estimate of net profit in INR million:

 

Brokerage	Net sales (in INR million)	Net profit (in INR million)	EBITDA (in INR million)
Nomura Equity Research	47,406	4,239	6,268
Sharekhan Ltd	47,720	3,790
Kotak Securities Ltd	48,580	3,747	6,456
Motilal Oswal Financial Services Ltd	47,886	3,734	6,335
JM Financial Institutional Securities Pvt Ltd	47,406	3,717	6,258
Systematix Shares and Stocks (India) Ltd	47,220	3,549	6,120
Nirmal Bang Equities Pvt Ltd	46,823	3,514	6,087
Elara Securities (India) Pvt Ltd	47,563	3,504	6,235
Nuvama Wealth Management Ltd	48,603	3,337	6,221
YES Securities (India) Ltd	47,707	3,275	6,297
Average	47,691	3,641	6,253

 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Avishek Dutta

 

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