Why Tata Consumer Share Price is Falling

The FMCG industry has experienced rapid growth in recent years. Rising disposable incomes, urbanisation, and shifting consumer preferences have driven demand across segments such as packaged foods, beverages, and personal care products.

Consumers are increasingly opting for premium and health-oriented products, which has intensified competition among market players.

Additionally, innovation, acquisitions, and expanding rural reach have become critical strategies for companies to maintain growth in this evolving landscape.

Tata Consumer Products is a leading name in the FMCG sector. It operates across multiple categories, offering well-known products like Tata Tea, Tata Salt, and Tata Sampann, along with Himalayan Natural Mineral Water. The company has a strong presence in both domestic and international markets.

It has focused on product innovation and acquisitions, such as its merger with Tata Chemicals' consumer division, to expand its portfolio. Tata Consumer also actively promotes sustainability by introducing eco-friendly packaging and sourcing practices.

Despite these efforts, Tata Consumer's share price is under significant pressure. Today it dropped 7%, reflecting investor concerns over the company's recent performance.

Read on to know why Tata Consumer share price is falling today.

Disappointing Quarterly Results

Tata Consumer Products reported modest profit growth but failed to meet market expectations, causing a sharp decline in its share price.

The company's quarterly net profit for Q2 FY25 rose 1% year-on-year (YoY) to Rs 3.7 billion (bn). However, this growth was accompanied by margin pressure.

Its earnings before interest, tax, depreciation, and amortisation (EBITDA) stood at Rs 6.3 bn, with EBITDA margins shrinking by 0.3% YoY to 14.9%.

Revenue increased by 13% YoY to Rs 42.1 bn, supported by contributions from recent acquisitions, including Organic India and Capital Foods.

However, the decline in key business segments raised investor concerns. The India beverage business saw a 3% drop in revenue, while volume fell 4% YoY due to weak demand. The company also lost 0.2% of its tea market share.

Tata Consumer's ready-to-drink business struggled, with revenue dropping 11% YoY due to unfavourable weather conditions and competitive pricing strategies. The management attributed the weak performance of the tea business to subdued market trends.

There was one positive factor among all the negatives. On the global front, the company's international revenue grew by 5% in constant currency, with improved profitability led by strong performance in the UK and earlier structural changes.

Despite some positive results from international operations, the company's overall performance fell short of expectations. The missed targets have led to profit-booking, pushing the share price down by 7% today.

Investors remain concerned about weak domestic demand and shrinking margins, putting pressure on Tata Consumer's near-term outlook.

What Next?

Tata Consumer Products is focused on becoming a full-fledged FMCG company. It plans to enter new product categories to reduce reliance on its core beverage and food segments.

The company is also conducting pilot programs in food services, pharmacies, and other channels to explore future growth opportunities.

The company has doubled its capex to Rs 7.9 billion for FY25, with significant investments in a new plant in Vietnam. Tata Consumer will continue looking for acquisitions that align with its focus on health-oriented and food products.

While specific acquisitions are not disclosed, it remains open to growth opportunities if they offer financial and strategic value.

Digital transformation is another key priority. The company is investing heavily in technology to improve productivity and enhance employee and customer experiences.

Tata Consumer will also expand its sales and distribution channels to strengthen its market presence. Additionally, the use of artificial intelligence tools will help improve operations and drive efficiency.

Marketing efforts will increase in a calibrated manner, with higher advertising spending to promote new products and maintain visibility. Tata Consumer aims to introduce more millet-based products, tapping into growing consumer demand for healthier options.

As the Indian consumer market expands with rising urbanisation and disposable incomes, the company is positioning itself to capture these opportunities and sustain long-term growth.

How Tata Consumer Share Price has Performed Recently

In the past five days, Tata Consumer share price has tumbled 8.7%. In the last month, it has slipped 16%.

The stock price is down 5.8% in the 2024. Additionally, it is up 15.3% in the last year.

The stock touched its 52-week high of Rs 1,254.4 on 7 March 2024 and a 52-week low of Rs 861.4 on 26 October 2023.

About Tata Consumer

Tata Consumer Products is a focused consumer products company uniting the principal food and beverage interests of the Tata Group under one umbrella.

The company's portfolio of products includes tea, coffee, water, salt, pulses, spices, ready-to-cook offerings, breakfast cereals, snacks, and mini meals.

In India, Tata Consumer Products has a reach of over 200 million households, giving it an unparalleled ability to leverage the Tata brand in consumer products.

To know more about the company, check out Tata Consumer Products company fact sheet and quarterly results.

For a sector overview, read our FMCG sector report.

You can also compare Tata Consumer with its peers.

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