Falling coffee prices hit Tata Consumer's margins, Q1 EBITDA slips 8%

Tata Consumer Products reported its earnings show for the first quarter of FY2026 on July 23.

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26 Aug, 2025 12:21

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Consumer staples major Tata Consumer Products Ltd (TCPL) posted an eight percent fall in consolidation EBITDA for the quarter ended June 30, 2025, while margins shrunk over 250 basis points, dragged by coffee price corrections in the non-branded business.

The firm reported consolidated EBITDA at Rs 615 crore, as against Rs 671 crore in the corresponding quarter last year, as a result of strong coffee price corrections in the non-branded segment. Further, the EBITDA margin shrunk 250 basis points, falling to 12.9 percent. The management attributed around 90 basis points of the shrinking margins to the volatility in coffee prices.

For the non-branded business, the segment's EBITDA tumbled 28 percent with margins contracting by 700 basis points, driven by lower coffee prices.

The profits from Tata Consumer’s non-branded business were lower because the gains it had booked last year, which was based on high coffee prices at the time, had to be reversed this year as global coffee prices came down. "Non-Branded Business profits were impacted by reversals of fair value gains of previous year on easing of coffee terminal prices," said the firm in an exchange filing.

This means that inventory had to be sold at lower market rates, therefore shrinking margins. This pressure is likely to continue in the second quarter, according to the management, but should ease from Q3 onwards as prices stabilize and the old stock gets replaced with lower-cost inventory.

However, the firm's management cautioned that while coffee prices are trending downwards, it is not steady trend, and there is still some volatility. "But if [coffee prices] are roundabout where they are currently, I think we'll see probably one more quarter of pain and then we should get back to the historical margins that we had in this," said Ashish Goenka, the Group CFO.

"You’re sitting with inventory and selling it at a lower price… We are probably close to the bottom on the margins front," added CEO and MD Sunil D’Souza in an analyst call, following the firm's earnings.

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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