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Informist, Monday, Oct. 26, 2026

 

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--Tata Consumer: Look to aggressively expand margins in FY27 
--CONTEXT: Tata Consumer mgmt's comments in post-earnings call with analysts 
--Tata Consumer: Took price increase of around 8-10% in tea in Q2 
--Tata Consumer: Aim single-digit volume growth in salt going ahead 
--Tata Consumer: Continuing to build mkt shr in salt, currently at around 40% 
--Tata Consumer: See tea volumes pick up due to new launches, winter 
 

 

By Avishek Rakshit and Arya S. Biju

 

KOLKATA/MUMBAI – After raising tea and salt prices last quarter to pass on rising input costs, Tata Consumer Products Ltd. is aiming for aggressive margin expansion in the current financial year and hopes to improve margins quarter on quarter, year on year, a top company official said Monday.

 

In the September quarter, the company's earnings before interest, tax, depreciation, and amortisation margins increased by 40 basis points on year to 14% and in the first half of the current financial year, the EBITDA margins at a consolidated level increased by 60 basis points to 13.8%. 

 

"We had guided for a 50 to 70 basis points (margin) expansion when we started off the (financial) year. We have seen margin pressure coming through the year, but we have also taken price increases. So, as we have seen any bit of pressure on costs, we have translated it into price to make sure we maintain volume," Sunil D'Souza, managing director and chief executive officer at Tata Consumer, told sector analysts at a post-earnings conference call. "We remain aggressively focused on expanding margins for the year."

 

D'Souza said Tata Consumer aims to increase margins every quarter, but seasonality also needs to be considered. Hence, the company is targeting margin improvement on a year-on-year basis. For instance, tea consumption picks up in winter and drops somewhat in summer. Similarly, ready-to-drink products sell more in the summer than in the winter. 

 

The company's revenue from the salt business, where the company is the market leader, grew 15% on year during the quarter to INR 10.99 billion. The salt portfolio's revenue growth came from price hikes and a 9% volume increase during the quarter. 

 

However, in the tea business – where the company has the second-highest market share in the country, sales volumes were flat in India amid subdued category demand. The company's revenue from the tea and coffee business declined 1% on year in the September quarter to INR 12.44 billion.

 

D'Souza said the company has raised tea prices by 8-10?pending on the variant and the price hike would suffice for the inflation the company saw in the past quarter. In salt, where the company sees single-digit volume growth going ahead, it raised prices to offset commodity inflation. 

 

The top company official said that after registering muted tea sales, Tata Consumer expects tea sales to pick up on account of new launches, especially in the premium segment, and the onset of the winter season, when tea consumption usually picks up. Premium teas not only command margins, they also aid the top line as these teas are priced higher than the usual ones. While focused on the premium segment, the company is also launching lower-priced products to drive volume growth, especially in South India. 

 

"We've launched Gold Reserve, which is at a higher (price) than (Tata Tea) Gold. We've launched Chakra Select, which is at a lower (price) than Chakra, trying to grow penetration and market share down south (India). And we've launched a Kannan Devan Gold (tea), which is at a one notch higher (price) than Kannan Devan (tea)," D'Souza said. 

 

The top company official said that over the next two to three years, the company's core tea and salts businesses are expected to grow in mid-to-high single digits, while the growth categories, comprising the foods and ready-to-drink beverages businesses, are expected to grow over 30% on year.

 

Monday, Tata Consumer shares ended 2.8% lower at INR 936.50 on the National Stock Exchange. The company announced September quarter results after market hours.  End

 

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

 

Edited by Saji George Titus

 

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