Tata Consumer's tea business displayed resilience amid inflationary pressures. The challenging demand environment, with tea prices increasing ~30% YoY in the last procuring season, led to consolidated Ebitda margins contaracting by ~260bp in Q1 FY26, of which ~160bp was attributable to the inacrese in tea prices with the company only being able to pass on ~70% of the cost increase to its customers.
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Motilal Oswal Report
With the moderation of tea prices and strong tea crop growth this season, we expect Tata Consumer Products Ltd.'s margins to recover in the Indian beverage business from H2 FY26. We also anticipate strong traction in its growth businesses.
We expect the company to sustain its growth momentum, aided by the mid-tolong-term triggers such as-
strengthening and accelerating its core business,
exploring new opportunities,
expanding its product portfolio and innovation, and
enhancing its focus on premiumization and health and wellness products.
We expect Tata Consumer to clock a revenue/Ebitda/PAT CAGR of 10%/12%/13% during FY25-27. We reiterate our Buy rating with an SoTP-based target price of Rs 1,300.
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