TATACONSUM - Tata Consumer

📊 NSE: TATACONSUM 🏢 Tea 📅 Last Updated: 12/14/2025 14:09

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 18% YoY to ₹4,966 Cr in Q2FY26. Segment growth: India Business grew 18% to ₹3,122 Cr; International Business grew 15% to ₹1,288 Cr; Non-branded business grew 28% to ₹590 Cr. For H1FY26, consolidated revenue was ₹9,745 Cr, up 14% YoY.

Geographic Revenue Split

India Branded business contributed 71% of total branded revenue (₹3,122 Cr) in Q2FY26, while International Branded business contributed 29% (₹1,288 Cr). Historically, India branded business accounted for ~63% of consolidated revenue in FY23.

Profitability Margins

Consolidated EBITDA margin stood at 13.6% in Q2FY26, expanding 70 bps sequentially. However, H1FY26 EBITDA margin was 13.2%, a contraction of 200 bps YoY. India business EBITDA grew 33% in Q2FY26 with a margin expansion of 180 bps, while International margins contracted by 400 bps due to lower gross margins.

EBITDA Margin

Consolidated EBITDA for Q2FY26 was ₹675 Cr, up 7% YoY. H1FY26 EBITDA was ₹1,291 Cr, down 1% YoY. The decline in H1 was primarily driven by adverse gross margins in International and Non-Branded businesses, partially offset by 11% EBITDA growth in the India business.

Capital Expenditure

Not explicitly disclosed in INR Cr for future periods; however, the company completed major acquisitions including Capital Foods (75% stake) in FY24 and Organic India (100% stake) in FY25 to expand its growth portfolio.

Credit Rating & Borrowing

ICRA reaffirmed [ICRA]A1+ rating. Interest coverage ratio was 19.0 times in 9M FY2024. Total debt/OPBDIT stood at 0.9 times in FY2023. The company maintains a comfortable financial risk profile with a net cash surplus of ₹968 Cr as of September 30, 2025.

⚙️ Operational Drivers

Raw Materials

Tea and Coffee are the primary raw materials. Tea gross margins are targeted at 34-36% of revenue. Coffee price volatility acts as a significant headwind, particularly impacting the US and non-branded segments.

Import Sources

Sourced globally including India (Tea/Coffee), Vietnam, and Brazil (Coffee). International operations span the UK, US, Canada, and Australia.

Key Suppliers

Not specifically named in the documents, though the company operates its own plantations and sources from third-party estates and auctions.

Capacity Expansion

Current reach extends to 275+ million households in India. Distribution expansion is a key driver, with growth businesses (Sampann, Soulfull, etc.) increasing their contribution to India Business from 18% to 28% YoY.

Raw Material Costs

Tea costs were significantly inflated in Q1FY26, leading to flat H1 EBITDA. Procurement strategy involves maintaining a 34-36% gross margin range for tea to balance market share and profitability.

Manufacturing Efficiency

Efficiency is driven by innovation, with 25 new product launches in Q2FY26 and 41 launches in the previous year to maintain a competitive edge.

Logistics & Distribution

Distribution reach is a core metric; the company aims for outlet-to-outlet retail distribution for high-margin brands like Capital Foods, which is more labor-intensive than wholesale-driven salt distribution.

📈 Strategic Growth

Expected Growth Rate

14-18%

Growth Strategy

Growth will be achieved through the 'Growth Business' portfolio (Tata Sampann, RTD, Soulfull, Capital Foods, Organic India) which grew 76% YoY. Strategy includes full-portfolio distribution, premiumization in Salt (Value-added salts grew 23%), and aggressive innovation (25 launches in Q2).

Products & Services

Packaged tea, branded salt, pulses, spices, ready-to-drink beverages (Tata Copper+), breakfast cereals, snacks, and organic health products.

Brand Portfolio

Tata Tea, Tetley, Tata Salt, Eight O'Clock Coffee, Tata Sampann, Tata Soulfull, Ching's Secret, Smith & Jones, Organic India, Tata Copper+.

New Products/Services

25 new product launches in Q2FY26. Growth businesses now contribute 28% of India business revenue, up from 18% in the previous year.

Market Expansion

Focus on deepening India reach (275m+ households) and scaling the International branded business which grew 15% in Q2FY26.

Market Share & Ranking

Maintains market leadership in branded salt in India. Tea business growth was muted due to competition from regional/local players.

Strategic Alliances

Acquired 75% of Capital Foods and 100% of Organic India to enter the pantry and health/wellness categories.

🌍 External Factors

Industry Trends

Shift toward premiumization and health-conscious products. The industry is seeing a re-emergence of regional players in the tea segment, forcing national players to focus on distribution and brand strength.

Competitive Landscape

Faces competition from regional tea brands and established FMCG players in the foods and pantry segment.

Competitive Moat

Moat is built on the 'Tata' brand trust, a massive distribution reach of 275m+ households, and a diversified portfolio ranging from daily essentials (Salt) to high-margin growth brands (Organic India).

Macro Economic Sensitivity

Highly sensitive to commodity price cycles (Tea/Coffee) and rural demand in India. Inflation in tea costs significantly impacted Q1FY26 margins.

Consumer Behavior

Increasing preference for branded pulses/spices (Sampann) and ready-to-drink functional beverages (Tata Copper+ which grew 36%).

Geopolitical Risks

Exposure to international markets (UK, US, Canada) makes the company sensitive to global supply chain disruptions and trade policies.

⚖️ Regulatory & Governance

Industry Regulations

Strict adherence to FSSAI norms in India and international food safety standards. Impacted by GST disruptions in late Q2/early October 2025.

Environmental Compliance

Diligently complies with food safety measures and evolving regulations on packaging and sustainability.

Taxation Policy Impact

Effective tax rate impacted by non-taxable dividends from subsidiaries and one-time credits from mergers in previous periods.

⚠️ Risk Analysis

Key Uncertainties

Volatility in coffee prices (headwind for US/Non-branded) and tea price fluctuations (impacted Q1 margins). Potential for market share loss if pricing exceeds competitive levels.