Sustained growth in volumes in the India business, steady international business, and operating leverage benefits are likely to help Tata Consumer Products report double-digit growth in profit for the quarter ended December.

The company’s net profit for the quarter is seen rising 26% year-on-year (YoY) to Rs 344 crore, according to the average of estimates given by six brokerages. Revenue from operations may rise 9% to Rs 3,779 crore and operating profit is likely to grow by a sharp 59.3% to Rs 723.20 crore.

Sequentially, the net profit is seen declining 2.6% and revenue rising 1.2%, while operating profit may surge 35%.

The FMCG major is slated to release its third-quarter earnings on Wednesday.

Here’s summarising analysts’ broad expectations from the Tata Group company:


Mid-single volume growth for India as momentum in the beverage/food business sustains. Gross margin to see steady improvement led by healthy improvement in international business. Operating leverage benefits, benign raw material index to flow down at EBITDA level.

Motilal Oswal Securities

We expect revenue for the India-branded tea business to grow 6% YoY, led by volume growth of 3% YoY. NourishCo is likely to continue its strong performance. EBITDA margin may improve to 13.8% from 13.1%. Tea and coffee prices are the key monitorables.

Kotak Institutional Equities

We model 7.4% YoY growth in consolidated revenues, led by 2.5%/4.5% volume/value growth in domestic tea (versus 3%/5% in 2Q), a 10% YoY growth in the India foods business (versus 15.6% YoY in 2Q), a 35% YoY growth in NourishCo (versus 25% in 2Q), mid-single-digit sales growth in international tea, and low-to-mid single-digit decline in coffee business on LFL basis.

India branded business (standalone): We estimate flat/80 bps YoY/QoQ increase in standalone gross margin due to stable brine and tea prices. We estimate 80/20 bps YoY/QoQ increase in standalone EBITDA margin owing to sequential gross margin expansion, offset by slightly higher A&P spends (6.9% of sales).

Aggregate of subsidiaries (largely overseas): We expect gross/EBITDA margin to improve 430 bps/300 bps YoY/QoQ off a weak base, aided by the company’s pricing interventions and savings from restructuring in different markets in the international operations, but partly offset by an increase in A&P spends (7.7% of sales). Overall, the consolidated EBITDA margin is expected to increase to 14.7% (up 30/160 bps QoQ/YoY).

Nuvama Institutional Equities

We expect revenue/EBITDA/PAT to grow 8%/17.4%/24.6% YoY. India beverage portfolio is likely to grow 8% YoY. We expect tea volume growth to be in the range of 3-4% YoY. India Foods business is expected to grow 5% YoY.

Salt business may witness volume-led growth of 3-4% YoY, while pricing is expected to be flat. We expect growth businesses to do well, especially NourishCo.

EBITDA margins are likely to expand 114 bps YoY to 14.2%. On the raw material cost front, we expect tea costs to look benign, while in the salt portfolio, the cost remains flat (brine has inched up and coal has corrected). Gross margins are likely to expand 88 bps YoY to 42.9%.

We anticipate the international business to grow 9% YoY and remain volatile. The tea category is expected to do well in the UK while Canada and the US businesses may see some pain. We anticipate international coffee to remain under pressure.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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