Tata Consumer Products shares tumbled almost 10% to an intra-day low of Rs 986.35. The stock fell a day after it reported weak Q2 FY25 earnings numbers. The company reported a net profit of Rs 359.3 crore in the second quarter of FY25 Vs Rs 338 crore posted in the same quarter last fiscal. The company’s revenue from operations stood at Rs 4,214.5 crore, up 13% on year compared to Rs 3,733 crore posted in Q1 FY25. However, the demand outlook is soft and the street is worried on the margins front.
The company’s EBITDA or profit margin came in at Rs 629 crore for the quarter. Its EBITDA margins contracted 30 basis points Y-o-Y to 14.9% in Q2 FY25.
Tata Consumer Products in Q1
The FMCG major reported an 8% fall in its consolidated net profit to Rs 290 crore in Q1 FY25 compared to Rs 317 crore in the same period a year ago. Its revenue from operations rose 16% on year to Rs 4,352 crore in Q1 FY25 against Rs 3,741 crore posted in the same quarter of the previous fiscal.
Elara Securities on Tata Consumer Products
While near-term demand remains soft dragging sales growth, Tata Consumer Products’ average selling price (ASP) increase in the tea business and growth momentum revival in NourishCo would be critical for improving sales growth and margin. “We believe increased competition coupled with slower growth in the urban markets are key near-term headwinds. However, we favour the company for its wide product offerings and possible gains from distribution expansion, which would provide visibility on double-digit sales growth and margin expansion in the long term,” said Elara Securities in a research report.
The brokerage house has slashed its earnings estimates for FY26 to 7.5% and FY27 to 6.7% on the back of lower revenue and margin. The brokerage firm maintained the “Accumulate” rating on the stock. However, it cut the target price to Rs 1,150 from Rs 1,280.
Tata Consumer Products Vs Nifty 50
In the past five trading sessions, Tata Consumer shares have fallen almost 9%. It has fallen a bit over 16% in the last one month and 13% in the last six months. The stock has erased 6% of investors’ wealth year to date. However, it has yielded a return of 15% in the last one year and 263% in the last five years.
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