Tata Consumer Products' consolidated revenue was up 18% YoY to Rs 49.7 billion (vs estimate Rs 47.7 billion). Consolidated Ebitda was up 7.3% YoY to Rs 6.7 billion (Rs 6.3 billion). Group net profit up 11% YoY to Rs 4 billion.
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Yes Securities Report
Tata Consumer Products Ltd. Q2 FY26 operating topline was strong and slightly ahead of our expectations on both topline and margins. Core India saw second consecutive quarter of double-digit growth with ‘Growth' businesses rebounding after a quarter of miss even while Capital Foods, Organic India, and Tata Soulfull were impacted by the GST 2.0 transition for few days.
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‘Growth' businesses rebounds:
After miss in Q1 FY26, combined ‘Growth' businesses (32% of India business in Q2 FY26) grew by 27% YoY. Management believes new businesses' growth to continue at >30% levels for some time.
Margins to improve QoQ:
Important to note, coffee prices are on a downward trajectory in the short term and tea prices remains favorable. As expected, Q2 FY26 onwards the company is seeing Ebitda margins profile improving and by Q3 it would reach to 15-16% margins largely led by improvement in tea margins.
Brief Valuation and View:
Price hikes already taken in tea portfolio and expectation of softer tea input cost will continue to aid margin recovery in FY26. Even in a difficult environment, Tata Consumer Products executed on its strategic priorities (strengthening GT, driving new channels, innovations, etc.).
With visibility of better margins in rest of FY26, we maintain our positive view of the stock. We thus maintain our Buy rating with a revised target price of Rs 1,420 (Rs 1,260 earlier).
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