As tea prices enter another deflationary cycle, consumer staples giant Tata Consumer Products expects volume growth to pick-up in the quarters ahead. The firm remains on track to see volume growth in the mid-single digits over the medium term, said CEO and managing director Sunil D’Souza.
“As prices stabilize, and more importantly, as tea costs go down and there is reindexing, you should start seeing volume start to pick up,” D’Souza said. Volume growth has fluctuated sharply over the past few quarters.
In December, Tata Consumer Products' volume growth was seven percent, while it clocked in at two percent in March. For the current quarter, volume growth has further moderated to one percent. On the flip side, value growth has gone from three percent in December, to seven percent in March, and 11 percent in the current quarter.
However, going forward, D’Souza believes that the value growth will be coming down, while volumes pick up.
A concern flagged during the analyst call following Tata Consumer's earnings show was the impact of competitive activity from unorganized players in a deflationary price environment. D'Souza noted that during the COVID-19 pandemic era that market share was shifting wildly as a result of strong price spikes in commodities and supply-chain issues.
However, at the current juncture, prices are moving up or down gradually, allowing companies time to navigate their pricing strategies accordingly. "I don't expect that market share will change dramatically because of prices moving up or down. They will change if we don't re-index our prices very quickly, especially when it goes down," noted D’Souza.
As for margins, D’Souza said the company is aiming to return to its gross margin range of 34 to 37 percent. However, he said that once that level is reached, Tata Consumer will need to pass on pricing benefits to consumers to stay competitive and protect market share. “We can’t go beyond this without losing share, which I don’t want to do,” he added.
Q1 earnings result
Tata Consumer Products reported a net profit of Rs 334 crore for the first quarter of the financial year 2026. This marks a 15 percent on-year jump from the Rs 290 crore net profit reported in the corresponding quarter of the previous financial year.
The company’s revenue from operations meanwhile rose 10 percent on-year to Rs 4,778.91 crore during the quarter under review, compared to Rs 4,352 crore in the same period last year.
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