Tata Consumer Q4 preview | Consolidated PAT likely to double on-year on surge in profitability

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Tata Consumer Products is expected to more than double its consolidated net profit for the quarter ended March, aided by a surge in profitability, when it reports its quarterly earnings on May 4.

The fast-moving consumer goods company’s consolidated net profit is expected to be at Rs 243.7 crore for the reporting quarter as against Rs 117.8 crore in the year-ago period, according to an average of estimates from five brokerages polled by Moneycontrol.

The likely strong bottomline performance will be aided by a 312 percent year-on-year growth in consolidated operating profit to Rs 1,236 crore, driven by lower tea prices in the quarter. North Indian tea procurement prices have nosedived more than 15 percent in 2021-22, however, the company has not reduced prices as inflation remains high in other segments.

“The company hasn’t taken much price cuts in tea business since there is still inflation in other parts of the portfolio and in transport,” Edelweiss Securities said in a preview note.

Tata Consumer’s consolidated revenue from operations are expected to rise 4 percent on-year to Rs 3,148 crore in the reporting quarter, aided by strong growth in domestic foods business and steady international operations.

Brokerage firm Kotak Equities said that domestic tea business is likely to see a 5 percent decline in revenues despite a 1 percent on-year rise in volumes.

Edelweiss Securities said the international product portfolio of the company saw flat growth in volumes but around 4 percent rise in revenues due to price hikes during the quarter.

Overall, the resilient volume growth and calibrated price hikes by the company will result in a sharp expansion in gross margins and operating margins of the company, analysts said.

Tata Consumer Products is likely to report a 360-458 basis points year-on-year expansion in consolidated operating margin to 13.5-14.5 percent for the March quarter.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.