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Tata Consumer Products Q4 misses street estimates; falls over 5%

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The shares of Tata Consumer Products declined almost 6 percent in early trade on Friday after the company’s March quarter earnings missed estimates.

Tata Consumer Products Q4 misses street estimates; falls over 5%
Tata Consumer Products declined almost six percent in early trade on Friday after the company’s March quarter earnings missed street expectations. The company reported a consolidated net profit of Rs 53.9 crore in Q4FY21 as against a loss of Rs 76.49 crore in the year-ago quarter. The profit was higher on account of lower exceptional items and a lower share of losses in associates and joint ventures.
“Profit before exceptional items and tax at Rs 262 crore is higher by 6 percent as compared to the corresponding quarter of the previous year, mainly on account of growth in revenue and good control over expenditure, however, margins were impacted by tea cost inflation in India,” the company said in a regulatory filing.
Consolidated revenue during the quarter grew 26.3 percent to Rs 3,037.22 crore from Rs 2,405.03 crore, YoY.
“The growth was mainly driven by volume and value growth in the India branded business and improved performance of the non-branded business,” the company added.
The exceptional loss for the current quarter (at Rs 63.93 crore) mainly represent costs relating to the business restructure and reorganisation of Rs 18 crore and loss on disposal of an overseas subsidiary/joint venture of Rs 46 crore, it said.
On the operational front, EBITDA declined 2.6 percent to Rs 300.2 crore from Rs 308.3 crore, while EBITDA margin contracted by 290 bps to 9.9 percent from 12.8 percent, YoY.
The company’s net profit and operational performance were below CNBC-TV18 analysts poll estimates, while revenue was in line.
The company’s board recommended a final dividend of Rs 4.05 per equity share for the financial year 2020-21.
Global brokerage Morgan Stanley is ‘underweight’ on the stock with a target at Rs 494 per share as the company’s earnings missed its estimates.
The brokerage said that there were headwinds from tea inflation in the domestic beverage business, lower growth in Tata Sampann and lower margin across the segment.
Nomura said that the company posted revenues in line with estimates, but margin missed on higher A&P and staff costs.
Despite a weak demand environment, the company took sharp price increases and managed to garner strong volume growth and share gains from the unorganised segment, Nomura said.
It sees higher Ad spending as positive, especially in an inflationary input cost environment. It also expects the company to drive superior volume growth and gain share from the unorganised segment.
Nomura maintained a Buy call on the stock with a target price of Rs 750 per share.
Yes Securities said that Tata Consumer posted a weak set of numbers with tea inflation and losses at Starbucks being the major culprits, partially offset by positives like strong growth and margins in plantations and Indian foods businesses.
"While the medium-term drivers remain intact, the stock now looks fully valued at about 43x FY23 earnings after a strong performance over the past year with most positives now priced in," the brokerage firm said.
At 9:55 am, the shares of Tata Consumer Products were trading 5.11 percent lower at Rs 620.00 apiece on the BSE as compared to a 0.86 percent gain on the benchmark Sensex.

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