Tata Group’s consumer staples firm is set to report its earnings for the fourth quarter of the previous fiscal year on April 23, 2025. According to experts, Tata Consumer Products Ltd. is likely to underperform its FMCG peers in terms of net profit growth as a result of sharp tea inflation.
According to a Moneycontrol poll of nine brokerages, Tata Consumer is likely to report revenue at Rs 4,555 crore, surging 16 percent on-year compared to Rs 3,927 crore in the March quarter of FY2024.
However, net profit is likely to come in at Rs 311 crore, down from Rs 432 crore from the corresponding quarter last year, falling a whopping 28 percent on-year.
Earnings estimates of analysts polled by Moneycontrol are in a narrow range, so any positive or negative surprises may elicit a sharp reaction in the stock. Even the most optimistic estimate sees TCPL’s net profit falling 17 percent on-year, however the most pessimistic projection suggests that net profit might sink 39 percent.
What factors are impacting the earnings?
Tea inflation impacts margins: As a result of a severe surge in tea prices, with price hikes lagging the raw material inflation, margins are likely to be pressured this quarter. However, according to experts at Nuvama Institutional Equities, the firm's tea business is likely to report volume growth of 3–4 percent on-year and value growth of 10 percent YoY, staging a recovery in sales.
India Business: India foods business is expected to report ~14 percent growth, driven by ~10 percent growth in salt portfolio and ~25 percent growth in growth businesses. Brokerages are expecting the salt business to post a strong performance, driven by price hikes.
International Business: Overall, brokerages estimated that Tata Consumer Products' international business shall grow marginally – likely one percent YoY in CC terms, compared to 7 percent in Q4FY24. "Within international business, U.S. shall witness 5–6 percent YoY value and volume growth, but this shall be offset by mid-single digit value/volume decline YoY in the UK due to high base (Red Sea issue)," stated Nuvama.
Why is PAT declining? The profit is likely to decline sharply on-year due to amortization charge pertaining to acquisitions. Nuvama also suggested that the steep decline in PAT will be due to lower tax rate in base quarter, i.e. Q4FY2024, relating to restructuring of corporate structure in the U.S.
What to look out for in the quarterly show?
Analysts will closely monitor demand in metro areas and tier-3 towns. Tea and coffee prices are also key monitorables, as tea prices surge to record highs. The impact of the raw material pricing on margins will be closely watched, as well as the growing competitive pressure from unorganized players.
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