Tata Consumer Q2 Profit Rises 16% to Rs 470 Crore as Growth Brands Offset a Flat Tea Business

Tata Consumer Products reported its September-quarter numbers on Monday evening, and they show a company whose growth now comes more from its newer brands than from tea. Consolidated revenue from operations rose 14% year on year to Rs 5,661 crore in Q2 FY27, up from about Rs 4,966 crore. Net profit rose roughly 16% to about Rs 470 crore. The figure attributable to owners is a little lower, at around Rs 467 crore, because of how associate and joint-venture income is counted.

Operating profit grew faster than sales. EBITDA rose 18% to Rs 794 crore, and the margin widened 40 basis points to 14.0%, despite what the company described as continued input-cost inflation in its India branded business.

The growth portfolio is now a large share of the business

The headline number in the release was the 40% jump in what Tata Consumer calls its growth businesses. These are Tata Sampann, ready-to-drink beverages, Tata Soulfull, vending, Capital Foods and Organic India. Together they brought in about Rs 1,438 crore in the quarter, the largest of the company's India revenue buckets, and now account for 38% of the India business. That compares with 32% a year ago and just 8% in FY21.

Tata Sampann, which sells pulses, spices, dry fruits and cold-pressed oils, grew revenue 57%. Ready-to-drink beverages grew 47% on 34% volume growth. Capital Foods, maker of Ching's Secret and Smith & Jones, grew 18% to about Rs 264 crore. Organic India grew 9% to about Rs 145 crore, though shipping disruptions weighed on its exports.

Salt holds up, tea does not

Salt held up well. Revenue rose 15% to about Rs 1,099 crore and volumes grew 9% even after a price increase, and the company said it raised prices again in October. Value-added and premium salt volumes grew 17%.

Tea was the weak spot. India tea and coffee revenue slipped about 1% to around Rs 1,244 crore, and volumes were flat because category demand stayed weak. Price increases kept revenue close to volume, but they did not bring demand back. The company is trying premium launches instead, including new Gold-tier variants under the Tata Tea and Kanan Devan names. It has not yet said how much they contribute.

Overall, the India business grew 17% to about Rs 3,666 crore, with underlying volume growth of 11%.

A heatwave cools the UK

International revenue rose 7% in rupee terms to about Rs 1,256 crore but fell 2% in constant currency. The United Kingdom was the main drag: sales fell 8% in constant currency as a long heatwave cut tea consumption, although Tetley did better than the category. The US grew 4% and Canada 8% in constant currency.

Tata Starbucks, the joint venture, grew revenue 15% on its fifth straight quarter of same-store sales growth. It now has 505 stores across 81 cities.

What it means

For investors, the quarter adds to a pattern that has been building for several years. The newer brands keep growing fast enough to cover for the mature ones, and that is now visible in the consolidated numbers. The risk sits at both ends. Tea is still the brand most people associate with the company, and its demand has not recovered. The newer categories, meanwhile, face heavy competition and need steady spending to keep growing. First-half revenue rose 13% to about Rs 11,010 crore, so the full-year picture depends on whether those two trends hold through the festive and winter quarters.

The shares will react to the numbers on Tuesday, as the results came out after market hours.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.