Tata Consumer Results Review: Net Profit Dips 42% but Margins Expand

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

POTENTIAL MULTIBAGGER

Do You Own this Little-known Smallcap Stock? >> READ MORE

  • Home
  • Views On News
  • Aug 4, 2021 - Tata Consumer Results Review: Net Profit Dips 42% but Margins Expand

Tata Consumer Results Review: Net Profit Dips 42% but Margins Expand

Aug 4, 2021

Yesterday post market hours, Tata Consumer Products reported a decline of 42.1% in its consolidated net profit to Rs 2 bn for the quarter ended June 2021.

This compared with a net profit of Rs 3.5 bn in the April-June quarter a year ago.

The fall in bottomline is due to a one-time exceptional gain in the previous year.

The exceptional item for the corresponding quarter of the previous year represents a gain of Rs 840 m on the conversion of a joint venture (NourishCo Beverages) into a subsidiary and costs relating to the business integration of Rs 210 m.

Sequentially, net profit of the maker of Tata Tea and Tata Salt rose 243.5%.

Key financials

The Tata group company's revenue from operations in the quarter under review jumped 10.9% to Rs 30.1 bn.

This compared with Rs 27.1 bn in the year-ago period.

Revenue was driven by a growth of 28% in India Beverages business (including NourishCo) and 20% in India Foods business.

The company's total expenses stood at Rs 27 bn, a rise of 16.7% as against Rs 23.1 bn a year ago.

Here's a table comparing Tata Consumer results on key parameters.

Financial Snapshot

(Rs bn) Jun-21 Jun-20 (YoY)
Revenue from operations 30.1 27.1 11%
Total expenses 27.0 23.1 17%
EBITDA 4.0 4.9 -17%
Profit after tax 2.0 3.5 -42%
Data Source: Investor Presentation

Commenting on the performance, the company's CFO L Krishnakumar told,

  • Despite the market disruption, we grew our India business.

    Overall, it is a strong double-digit growth in spite of lockdown and other implications.

The profitability in India business was lower because tea cost in the latter part of the year went up significantly and now, it has started to come down, he added.

Commodity Price Trend

Krishnakumar also said the non-branded business, which is Tata Coffee plantation, also did well in this quarter.

Segmental performance

Revenue from its India-beverages segment was up 28.2% to Rs 12.7 bn on top of a 3% volume growth.

Its India food business jumped 19.6% to Rs 7 bn, compared with Rs 5.9 bn in the year ago period.

Despite a high base in the corresponding quarter, the company registered a 17% volume growth.

During the quarter, its e-commerce segment recorded a significant growth of 153% year on year (YoY) and contributed 7.3% of domestic sales.

Revenue from the international-beverages segment were lower by 12.7% as last year, the company benefitted from pandemic induced pantry shopping.

Key Businesses Snapshot

Pantry shopping was absent this year as it witnessed restricted store timings and disruptions to its last-mile logistics.

Tata Starbucks recorded revenue growth of 371% in June 2021 on a very low base of last year.

Despite this steep growth, revenue for the Tata Starbucks, a 50:50 joint venture between Tata Consumer and Starbucks Corporation, was lower compared to the same period in fiscal 2020.

During the quarter delivery contribution increased to 27%, driven by several focused initiatives to offset the decline in dine in.

Its US coffee volumes contracted 16% YoY. Tata Coffee, including Vietnam, witnessed 6% volume decline.

On its outlook, the company said second wave in India is now receding and there seems to be a V-shaped recovery since second half of June.

Its international markets (US, UK, Canada) are seeing a return to pre-Covid demand trends of packaged tea and coffee categories.

With increased mobility, Tata Consumer is expecting to see improving trend in Starbucks and further acceleration in NourishCo business.

Comparison with top companies' earnings

Among the top consumer goods companies which have so far announced earnings, Nestle India and Hindustan Unilever (HUL) saw their margin narrow over the preceding three months as commodity costs rose.

Nestle India highlighted rising commodity prices across oils and packaging materials.

Meanwhile, Britannia's margins remained steady. Britannia also witnessed an increase in the prices of palm oil and crude.

FMCG companies will need to navigate the next couple of quarters of very high inflation.

How the stock markets reacted to Tata Consumer's earnings

Tata Consumer Products share price opened the day up by 0.1% at Rs 769 on the BSE against its previous close of Rs 767.

Shares of the company slipped 1.4% to Rs 755 as the session progressed.

Tata Consumer shares have a 52-week high quote of Rs 787.60 touched last month on 27 July and a 52-week low quote of Rs 436.40 touched on 4 August 2020.

Over the past year, shares of the company have outperformed benchmark indices and gained 77%.

At the current price of Rs 761, the company commands a marketcap of Rs 701.9 bn.

About Tata Consumer Products

Tata Consumer Products is a focused consumer products company uniting the principal food and beverage interests of the Tata Group under one umbrella.

The company's portfolio of products includes tea, coffee, water, salt, pulses, spices, ready-to-cook offerings, breakfast cereals, snacks and mini meals.

Tata Consumer Products is the 2nd largest branded tea company in the world. Its key beverage brands include Tata Tea, Tetley, Eight O'Clock Coffee, Tata Coffee Grand, Himalayan Natural Mineral Water, Tata Water Plus, and Tata Gluco Plus. Its foods portfolio includes brands such as Tata Salt, Tata Sampann, and Soulfull.

In India, Tata Consumer Products has a reach of over 200 m households, giving it an unparalleled ability to leverage the Tata brand in consumer products.

To know more about the company, check out Tata Consumer Products company fact sheet and quarterly results.

For a sector overview, read our FMCG sector report.

You can also compare Tata Consumer with its peers.

Tata Consumer vs CCL Products

Tata Consumer vs Tata Coffee

Tata Consumer vs Goodricke

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Equitymaster requests your view! Post a comment on "Tata Consumer Results Review: Net Profit Dips 42% but Margins Expand". Click here!

  

More Views on News

TATA CONSUMER 2021-22 Annual Report Analysis (Annual Result Update)

Jun 8, 2022

Here's an analysis of the annual report of TATA CONSUMER for 2021-22. It includes a full income statement, balance sheet and cash flow analysis of TATA CONSUMER. Also includes updates on the valuation of TATA CONSUMER.

The Top 4 Tea & Coffee Stocks to Add to Your Watchlist (Views On News)

Apr 25, 2022

The Russia-Ukraine war and Sri Lanka's economic crisis have brought tea exporting companies in focus.

Shrinkflation: The Inflation You're Not Supposed to See (Views On News)

Jun 23, 2022

Everything we are buying is getting expensive. We are just not noticing it. Welcome to the world of 'shrinkflation'.

FMCG Index is Giving Bullish Signals. Time to Buy? (Views On News)

May 9, 2022

The ratio chart of FMCG index to the Nifty suggests the FMCG index will outperform.

5 Takeaways from HUL's Q4 Results (Views On News)

Apr 27, 2022

In fiscal 2022, HUL achieved a milestone of becoming a Rs 500 bn turnover company.

More Views on News

Most Popular

Coffee Can Investing - The 'do Nothing' Strategy For Stock Market Fortunes

The key to creating a fortune with Coffee Can stocks is buying them when there are still some clouds of uncertainty hovering ...

4 Sectors to Watch for Future Multibagger Stocks (Views On News)

Jun 17, 2022

With India's economic recovery accelerating, these sectors are likely to give multibagger returns in the future.

Why Tata Power Share Price is Falling (Views On News)

Jun 14, 2022

Here's why shares of Tata Power have fallen in recent days.

Is it Time to Start Buying Stocks Selectively? (Profit Hunter)

Jun 16, 2022

Some sectors have corrected by 50%. Do they merit a look?

Best Monopoly Stocks to Own in 2022 Views On News (Views On News)

Jun 18, 2022

Constant product innovation, latest technology, strong supply chain etc can all help companies enjoy monopoly like fortunes.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

TATA CONSUMER SHARE PRICE


Jun 27, 2022 (Close)

TRACK TATA CONSUMER

  • Track your investment in TATA CONSUMER with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

TATA CONSUMER - KANCO TEA & INDUSTRIES COMPARISON

COMPARE TATA CONSUMER WITH

MARKET STATS