Tata Consumer Products reported a robust 12% consolidated revenue growth in Q1 FY27, driven by strong performance across key segments. The India business saw a 13% UVG growth, with significant contributions from salt and growth businesses. Innovations and strategic execution are key drivers, with 14 new products launched. The company is focused on expanding its portfolio and maintaining healthy margins across diverse categories.
Tata Consumer Products Q1 FY27 Performance
Tata Consumer Products announced strong financial results for the first quarter of Fiscal Year 2027 (Q1 FY27), ending June 30, 2026. The company achieved a consolidated revenue growth of 12%. The India business demonstrated a remarkable 13% volume growth (UVG), bolstered by stellar performance in its growth segments. Sunil D’Souza, Managing Director and CEO, highlighted that this quarter was the best ever for the growth businesses, which now constitute over one-third of the India business. Key growth drivers included Sampann, which grew 58%, and RTD (Ready-to-Drink) revenue, up 41%. Capital Foods and Organic India combined saw a 35% growth.
International and Segment Performance
The international business grew by 3% in constant currency, and 16% overall including forex. The U.S. business showed a consistent 7% constant currency growth, marking its seventh consecutive quarter of share growth. Despite challenges like a warm summer impacting sales in the UK and US, specialty tea brands like Teapigs and Good Earth continued to perform strongly. Starbucks also delivered a good quarter with 11% revenue growth, supported by mid-single digit same-store sales growth.
Financial Highlights
Consolidated EBITDA grew by 19%, with a 70 basis points expansion in EBITDA margin, reaching 13.6%. Profit Before Tax (PBT) increased by 27%, and net profit saw a rise of 29%, amounting to INR427 crore. Earnings Per Share (EPS) stood at INR4.31, with an adjusted EPS of INR4.67. Ashish Goenka, Group CFO, noted that segment performance in India improved, supported by better margins in tea and salt. While the international business showed mixed results due to coffee price normalization and FX losses, the company expects improvements in subsequent quarters.
Strategic Priorities and Innovation
Tata Consumer Products continues to focus on its strategic priorities, including increased A&P (Advertising and Promotion) spending. Growth businesses now represent 36% of the portfolio, growing at 47% year-on-year. Innovation remains a key pillar, with a focus on health and wellness, convenience, and premiumization. The company launched 14 new products during the quarter and has a robust pipeline for future innovations. Sustainability efforts are also ongoing, with the company now a member of the Dow Jones World Index.
Future Outlook and Guidance
The company reiterated its guidance for the growth business at 30% growth. For the salt business, mid-to-high single-digit growth is targeted, with efforts to cross the 40% market share mark. The India tea business is expected to maintain its mid-single digit volume growth. The company anticipates a strong revenue growth trajectory, with growth businesses expected to continue their upward trend and contribute significantly to overall performance. The management expressed confidence in their ability to navigate inflationary pressures through judicious pricing and cost-saving initiatives.
Key Business Segments Deep Dive
India Business: Tea volumes grew 2% despite a prolonged summer, though revenue declined 4% due to passing benefits of lower tea costs to consumers. Salt revenue grew 7% with 7% volume growth. Growth businesses, including Sampann (up 58%), RTD (up 41%), Capital Foods, and Organic India (up 35% combined), showed exceptional performance. International Business: Constant currency growth was 3%, reported growth 16%. The U.S. business achieved 7% constant currency growth. Non-branded coffee business declined 7% (10% in constant currency) due to falling coffee prices.
Capital Foods and Organic India Expansion
Capital Foods and Organic India are key focus areas for growth. Capital Foods achieved INR232 crore in revenue and Organic India INR118 crore, both with healthy gross margins close to 50%. Growth for Capital Foods was 40% and for Organic India 27%. The company is looking at new launches to expand addressable categories for these businesses. Plans include disruptive plays in the Korean noodle space and expansion into supplement categories for Organic India.
Water Business Growth
The water business, specifically Tata Water Plus, is showing strong growth. Volumes for the RTD business grew over 30%, with water contributing to these numbers. The company underestimated growth rates in some regions and is now investing in capacity expansion. While availability is present in 75% of the country, distribution and marketing efforts are being enhanced to reach a wider market. The company sees significant white space in the North and East regions.
Source: BSE
