TCPL pins growth on new-age portfolio as tea and salt remain steady

Tata Consumer Products Ltd (TCPL) is increasingly leaning on its fast-growing portfolio of newer businesses to power its next phase of growth, as its legacy tea and salt categories settle into a mature growth trajectory. The company said businesses such as Tata Sampann, Capital Foods, Organic India and ready-to-drink (RTD) beverages will continue to underpin double-digit revenue growth, with management maintaining that these segments can sustain 25-30 per cent growth going forward.

Speaking during the company's post-quarter analyst call, Sunil D'Souza, Managing Director and CEO, said growth businesses now account for 36 per cent of the India business after expanding 47 per cent year-on-year. "Our aspirations are at 25 to 30 per cent growth... 25 to 30 per cent should be the new normal going forward," he said, adding that the company would continue investing in innovation, advertising and distribution to scale these businesses.While reaffirming the company's long-term outlook, D'Souza said TCPL expects to continue delivering double-digit overall revenue growth despite a high base. "We will drive double-digit growth. There will be those odd quarters where we will have mid-teens. There will be those quarters where it will be low double-digits," he said, noting that the runway for the company's growth businesses remains "as long as you can imagine."

The comments came after TCPL reported a 12 per cent year-on-year increase in consolidated revenue from operations to ₹5,349 crore for the June quarter, while net profit rose 29 per cent to ₹427 crore. India branded business posted 13 per cent underlying volume growth, while the international business grew 16 per cent on a reported basis.

D'Souza said the beverages business faced temporary headwinds during the quarter. "A minor issue of LPG shortages impacting small restaurants and street-side vendors, including hot tea shops in the South, did impact the business," he said. Overseas, an unusually warm June affected demand across key markets. "The US, UK and Canada were impacted, especially in the month of June, by the unusually warm summer... most specifically in the UK and in the black tea category," he noted. However, coffee continued to perform strongly, growing 24 per cent, while the salt business delivered a robust performance despite calibrated price hikes taken during June.