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Aditya Sharma    

Mumbai, India

I am a MBA students and simultaneously reading on capital market to get some knowledge on fundamental research where I more focus on business model, opportunity size of the industry and their related parameters who help me out to find out great businesses for the investment. Nevertheless, I always look forward to learn about grow further into the same.

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Contributor since: 2022







Tata Consumer Products Limited

A Q4FY23 & FY23 Result Analysis

Q4FY23 Result Highlights

  • Tata Consumer, saw consolidated revenue growth of 14% YoY (up 12% yoy in cc terms) was ahead of our estimates due to strong performance in Food (up 26% yoy) and better than expected growth in International business (up 11% YoY). Revenue growth on a 3 years CAGR perspective is c.15%.
  • India business grew 15% yoy mainly driven by salt portfolio (24% yoy) despite higher base (up 19% in 4QFY22); whereas beverages portfolio recovered (8% YoY), after five consecutive qtrs. of sub-par growth.
  • Gross margin compression accelerated (down c280 bps YoY) owing to high cost tea inventory for domestic business along with pressure in margin profile of international business (although improved sequentially). International margins were under stress owing to input cost inflation, currency weakness, and lag in pricing.
  • Ebitda margin remained flat YoY to 14% mainly despite GM pressure; as it rationalized ad spends (reflected in 2% YoY growth in operating expenses)
  • Adj PAT saw 16% growth due to strong operating performance

India Food Business

  • For the quarter, the India Packaged Beverages business delivered 1% revenue growth and 3% volume growth, recording a sequential recovery.   
  • The premiumisation agenda continued with the premium tea portfolio performing better than the mass economy segment. 
  • The company continued to retain market leadership in tea in the E-commerce channel   
  • Coffee continued its strong performance with a revenue growth of 31% YoY 
  • Tetley launched an impactful Women’s Day campaign #everyBODY can, challenging stereotypes on what fitness looks like. Tetley #everyBODYcan - YouTube 
  • Tata Tea Premium continued its hyperlocal approach with the #DeshKiJhanki campaign for Republic Day, festive packs and a 360 degree campaign for Lohri in Punjab and the #UtkalaKiKala campaign for Odisha Day inspired by the region’s handlooms. 
  • For the quarter, the India Foods business delivered 26% revenue growth and 8% volume growth, bringing to close a strong year for the foods business when revenue grew 26%. 
  • The salt portfolio continued its strong momentum and recorded double-digit revenue growth during the quarter and also during the year. The salt portfolio also continued to record market share gains. 
  • We have strengthened our salt business through a multi-brand play. From mostly vacuum-evaporated salt, we now offer consumers a complete assortment across various types, benefits, and price points. 
  • The value-added salts portfolio grew 4.5x during the year, in part led by new innovations like Tata Salt Immuno- salt fortified with zinc.
  • Tata Sampann continued its strong trajectory in Q4, recording double digit revenue growth for the quarter and also for the year. The growth was led by broad based performance across categories.
  • Tata Sampann tapped into the health & wellness trend with the launch of Makhana. We also launched Indori style poha, a localized version catering to regional tastes.
  • NourishCo had a landmark year, hitting Rs 621 cr in net revenue, up 80% led by broad based performance across products and geographies. Tata Gluco+ continued to expand its geographic footprint and rolled out its first national campaign during the quarter. It launched a new Cola variant which is seeing good response. 
  • The company continued the momentum on innovation with our innovation to sales ratio growing from 0.8% in FY20 to 3.4% in FY23. The pace of innovation has accelerated with 34 new launches during the year.
  • The company continued to make consistent progress in our Sales & Distribution reach. We have achieved a direct reach of 1.5 million outlets and are on track to reaching 4 million outlets in total reach in FY24, in line with our stated targets. 
  • Alternate channels continue to fuel our growth and innovation agenda.  In FY23, Modern Trade channel grew 21%, contributing to 14% of India business sales. The E-commerce channel grew 32%, contributing to 9% of India business sales. Notably, 10% of E-commerce revenue came from NPD (New Product Development) during the year.

International Business

  • For FY23, the International Beverages business revenue grew 8% and we implemented price increases in all markets to mitigate inflation.
  • In the UK, we are developing recyclable packaging for Tetley to unlock brand equity and drive our sustainability agenda. 
  • In the USA, teapigs continued to outpace the specialty tea segment and after the successful launch of Tata Raasa (a Ready to Eat and Ready to Cook range developed specifically for international markets) in ethnic channels, we are gearing up for its mainstream launch. 
  • In Canada, Tetley launched the ‘Live teas’ specialty tea range and introduced the Tata World Foods portfolio.

Starbucks Business Updates

  • Tata Starbucks recorded strong revenue growth of 48% for the quarter, bringing FY23 growth to 71%, albeit on a base that was impacted by the pandemic. 
  • Opened 71 new stores during the year and entered 15 new cities- the highest ever annual store addition. This brought the total number of stores to 333 across 41 cities. 

NourishCo Business Updates

  • Nourishco had a landmark year, recording Rs 621 cr. in net sales for the year, up 80% YoY.
  • The business recorded a strong revenue growth of 79% during the quarter. The growth was broad based across products and geographies.
  • Tata Copper+ is >7x, Tata Gluco Plus is 2.2x and Himalayan is 3.3x the irrespective sizes in FY21.
  • Himalayan grew 74% during the quarter, profitably.

Macro Environments

  • North India tea prices continued to come off sequentially, in line with historical annual trends, as we entered non-plucking season.
  • South India tea prices for the quarter were 11% higher YoY.
  • Kenyan tea prices softened sequentially

  • Arabica prices for the quarter remained stable QoQ on projections for higher Brazil coffee production.
  • Robusta was higher sequentially but 10% lower YoY.

Concall Highlights

  • After 5 consecutive quarters of subpar growth, the India beverage industry's revenue climbed 8% YoY (vol growth of 3%), helped by a severe winter and pricing adjustments in the tea category. Mgmt is still current. cautiously hopeful about a volume growth rebound because a) there have been some early signs of improvement in rural demand and b) the Hindi Heart Belt has a favourable base.
  • While the Economy segment was impacted by rural slowdown and saw further amplification due to market share loss (down c113bps YoY) during FY23, the Premium segment experienced respectable growth throughout the year.
  • Due to the salt industry's strong expansion, the Indian food industry saw a 26% increase in income. The salt segment grew 24% YoY with 8% volume growth despite high base due to price hike (33%+ in last year), strong traction in premium salt portfolio, and market share gains (76bps YoY). Additionally, it reported 8% vol growth primarily driven by market share gains in salts business and in market execution. Given management's aggressive efforts to increase the salience of premium products, particularly Tata salt Immuno, the premium salt portfolio increased by 4.5 times.
  • The portfolio of Tata Sampann experienced robust double-digit growth, driven by good performance across a variety of staples and dry fruits. Tata Soulful maintained a great growth trajectory (increased 100% YoY), capitalising on TCPL distribution and expanding the reach of the Rs 10 No Maida Chocolate Pack (currently available in 300k+ outlets). During 4QFY23, it introduced value-added Poha and Makhana. Please take notice that newly incubated categories (Sampann, Soulfull, and Nourishco) now account for 15% of India sales in FY23 compared to 10% in FY22, while revenue increased by 53% year over year.
  • Due to strong performance in the UK and Canada markets despite negative performance in the USA Market due to unfavourable currency movement and inflation, international revenue witnessed price led growth of 11% yoy (1% ex acquisitions in constant currency). Additionally, the International Beverages segment's EBIT increased 44% qoq due to price increases (15% in February 23) implemented across the market and cost restructuring, which caused the EBIT margin to increase from 9.5% in the third quarter of 2018 to 12.9% in the fourth. Notably, EBIT for the international business fell 20% YoY in FY23.

Financial Performance

Segment Wise Performance




I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure:

Source - Company's press release, investor presentation and Conference Call. Disc - Not an recommendation

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.


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