India’s Tata Consumer beats Q2 profit estimates as demand for packaged food rises

INDIA’S Tata Consumer Products on Friday (Oct 18) reported second-quarter profit that surpassed estimates, as the salt-to-spices maker benefited from higher demand for its packaged food amid a pickup in rural demand.

The Tata group-owned company reported a jump of about 8 per cent in consolidated net profit to about 3.6 billion rupees (S$56.8 million) for the three months ended Sep 30, outpacing analysts’ estimate of about 3.3 billion rupees, as indicated by LSEG data.

Partly driven by higher government spending, rural demand over the last three quarters – including the period from July to September – has gathered pace and overtaken urban growth.

Tata Consumer has been expanding its distribution network into areas such as small towns and villages. The company, known for products such as Tetley tea, its namesake brand of salt and Organic India herbal supplements, has been taking advantage of the growing demand in those places.

This move has helped its Indian food business to post a 28 per cent jump in quarterly revenue. Meanwhile, its international business rose 7 per cent, countering weak demand for its beverages in India.

Overall revenue from operations grew nearly 13 per cent to about 42.1 billion rupees.

Tata Consumer has also increased the prices of its tea products in India to counter growing expenses, which have been hurting other companies that have similar offerings. It has also raised the price of its packaged salt.

Earlier this week, instant coffee maker Nestle India’s second-quarter profit fell, as it grappled with higher ingredient prices and softer consumer demand.

Consumer products company Marico expects second-quarter revenue to grow due to price hikes. At the same time, Dabur forecasts its first decline in quarterly revenue in four years on weak demand for its foods and beverages.

Tata Consumer’s shares closed marginally higher on Friday, bringing gains to 2 per cent this year. REUTERS