Q2FY23 Preview: Tata Consumer Products: Revenue seen at Rs33,078 million, PAT at Rs2,527 million

19 Oct 2022 , 04:38 AM

Result date: 20^th October, 2022
Recommendation: Add
Target price: Rs815
 
During the September 2022 quarter, Tata Consumer Products (Tata Consumer) is likely to post lower single digit growth in sales volumes of tea in India. Large part of this volume growth could come in from the price corrections undertaken by the company over the past few quarters to pass on deflation in tea prices. In case of the foods business, a high base of the year-ago quarter (volume growth of 16% was seen in Q2FY22) could lead to marginal decline in overall volumes. However, this could be more than offset by strong 20%+ growth in pricing.

Overall, revenue of the foods segment should grow at a healthy pace.

Analysts at IIFL Capital Services believe NourishCo should continue its momentum and deliver strong growth in the quarter. Eight O’Clock is expected to report a lower single-digit constant currency growth mostly led by pricing growth. Overall sales growth is expected at 9% over the year-ago quarter.

Tata Consumer’s EBITDA margin could decline 120 basis points over the year-ago quarter to 12.4%, amid continued input cost pressure.

The company’s Profit After Tax or PAT could decline 9.9% over the year-ago quarter.

Important management insights to watch out for:

• Update on new product launches in the India Foods business
• Trends and outlook for tea prices
• Pricing action planned
• Demand trends across all key segments

Rs. Million	September 2022 estimates	YoY change
Sales	33,078	9.1%
EBITDA	4,108	(0.6)%
Profit After Tax	2,527	(9.9)%

Source: Company, IIFL Research