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Systematix Research Report
Tata Consumer Products Ltd.'s Q2 FY25 operating results were broadly in-line with our expectations, with revenue/Ebitda growth of 13%/17% YoY respectively (including Capital Foods and Organic India and organic revenue up 5% YoY.
The India foods' business continued to lead growth with value/volume +28% YoY (+9% YoY organic)/+1% YoY, with Sampann sustaining robust growth (+26% YoY) and salt growing 2% YoY (price/mix-driven).
The India tea business (volume -4% YoY organic) faces sharp tea cost escalation of 25-30%; while Tata Consumer has taken some calibrated price hikes, management intends to prioritize market share over margins here, and will hold back pricing unless competitors take hikes as well.
NourishCo (sales -11% YoY) was impacted by unfavorable weather and competitor pricing; Tata Consumer indicated that requisite price cuts have been taken, and expects growth to revive to 25-30% by end-Q3.
Starbucks (+2% YoY) was subdued amid a wider downturn in the quick service restaurant industry, with negative same-store sales growth.
International beverages' topline grew 7% YoY driven by UK tea while U.S. Coffee grew 2% YoY. Non-branded solubles/plantations sales grew 19% YoY on strong coffee realisations.
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