India's Tata Consumer beats Q2 profit estimates as price hikes boost margins

Tata Coffee

31/10/2023 12:49

CHENNAI/BENGALURU, Oct 31 (Reuters) - India's Tata
Consumer Products  TACN.NS  reported quarterly earnings above
market expectations on Tuesday, as the salt maker's margins got
a boost from price increases it had implemented to counter
rising raw material costs.
    Global consumer goods companies have raised prices of
everything from noodles to salt over the last year to protect
their earnings margins even as they face a potential impact on
demand from inflation-stung consumers.
    Tata Consumer has aggressively raised prices of its salts,
with its sales volume holding up well as the consumer goods
major also added new variants and rapidly expanded availability
across the country.
    That helped its revenue from operations climb 11% to 37.34
billion rupees ($448.6 million) in the second quarter ended
Sept. 30.
    The India business, which makes up two-thirds of its topline
and sells salt, tea and coffee in the country, grew 11%, while
the international business grew 13%.
    Tata Consumer consolidated net profit rose 3% to 3.38
billion rupees, beating analysts' average estimate of 3.35
billion rupees, according to LSEG data.
    "(Core earnings margin expanded) on account of pricing
interventions in most of our international markets, softening of
commodity costs, and better operating cost controls," Tata
Consumer said in an investor presentation.
    Shares in Tata, which Reuters reported last month is in
talks to buy at least 51% of popular Indian snack food maker
Haldiram's, closed up 0.8%, taking their gains to 17.4% this
year.
    Tata's results come a week after Hindustan Unilever  HLL.NS 
and ITC  ITC.NS  said competition from smaller rivals had risen
as prices of ingredients - which had come off their recent highs
- had created a more level playing field.
    Separately, Tata Consumer said L. Krishnakumar is retiring
as the group's finance head on Tuesday.
 
 ($1 = 83.2444 Indian rupees)

 (Reporting by Praveen Paramasivam in Chennai and Ashna Teresa
Britto in Bengaluru; Editing by Savio D'Souza)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))