Tata Tea owner Tata Consumer Products Ltd (TCPL) shares jumped on Thursday, July 24 after the FMCG player reported an in-line earnings show for the quarter ended June, with expectations of margin recovery in the quarter ahead on moderating tea prices.
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.
TCPL posted an eight percent fall in consolidation EBITDA for the quarter ended June 30, 2025, while EBITDA margins shrunk over 250 basis points, dragged by coffee price corrections in the non-branded business.
Tata Consumer Products expects its branded tea margins to bounce back by the December quarter, aided by falling auction prices and improved pass-through of cost inflation.
Tea prices makes up a significant portion of Tata Consumer's revenue and had been surging since 2024 amid adverse weather conditions and supply snarls. The owner of Tata Tea, expects the prices to move downward, with Q2 being the transition period. Tea prices are currently down 13 per cent YOY according to the latest auction data.
At 9.16 a.m., shares were quoting Rs 1,098.1, higher by 3.3 percent on the NSE.
Should you buy, sell, or hold shares of TCPL?
Japan-based brokerage Nomura has a 'buy' rating on Tata Consumer with a target price of Rs 1,300 per share. Q1 sales were in line, though EBITDA came in slightly below expectations. The company remains confident of achieving double-digit sales growth and a strong margin recovery in the second half, said the brokerage.
Morgan Stanley maintained its 'overweight' tag with a target price of Rs 1,255 per share. Both revenue and EBITDA margin beat the brokerage's estimates. The brokerage expects margins to improve sequentially and return to normative levels.
With moderating tea prices and improving product mix (higher sales of premium tea), consolidated margins are expected to expand from Q2FY26, led by better gross margins in the tea business, as indicated by management. The company has guided for consolidated EBITDA margin to gradually reach ~16 percent by Q3, noted Motilal Oswal. The brokerage kept its 'buy' call intact, with an increased price target of Rs 1,270 per share.
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