Profit Up, Stock Down: Tata Consumer Falls 4.5% in Early Trade

On Thursday morning, investors observed a classic case of market behavior that initially defies logic. Tata Consumer Products Ltd (TCPL), a key arm of the Tata Group, reported a stellar rise of 59.19% in net profit for the March quarter, comfortably beating estimates. Yet, the market responded with a sharp 4.5% drop in its share price in early trading, with the stock slipping to ₹1,098.30 apiece on the NSE.

Let’s break down what happened, why it might have occurred, and what the numbers say.

Tata Consumer’s Q4 FY24 Performance

Tata Consumer reported a net profit of ₹344.85 crore for the quarter ended March 2025, a sharp increase from ₹216.63 crore reported in the same quarter last year. This 59.19% growth in bottom line beat market expectations, with a CNBC-TV18 poll having forecasted a profit of ₹305 crore. Revenue from operations also exceeded street estimates, coming in at ₹4,608.22 crore, up 17.35% from ₹3,926.94 crore in the corresponding quarter of FY24. Analysts had projected a revenue of ₹4,575 crore.

The company’s Earnings Before Interest and Taxes (EBIT) stood at ₹620.8 crore.

Adding to the positivity, the board recommended a final dividend of ₹8.25 per equity share of ₹1 each (825%) for FY24- 25. According to the company, if shareholders approve it at the upcoming 62nd Annual General Meeting, the dividend will be paid or dispatched on or after June 21, 2025. Source: The Mint

With these results, Tata Consumer ended FY24 with a robust finish. But if the numbers are so strong, why did the stock take a hit?

Q4 Breakdown by Business Segment

Branded Business

The company’s branded business reported revenue of ₹4,130.40 crore. Within this:

• India business generated ₹2,936.72 crore in revenue.
• International operations contributed ₹1,193.68 crore.

Non-Branded Business

Non-branded business recorded revenue of ₹500.55 crore for the quarter. Source: Financial Express

What Worked for Tata Consumer

In the Indian market, both the Beverages and Foods divisions delivered solid results:

• India Beverages experienced 9% revenue growth (excluding Organic India), driven by a robust performance in the tea, coffee, and Ready-to-Drink (RTD) segments.
• The RTD segment reported 10% revenue growth, driven by 17% volume growth.
• India Foods business jumped 27% in Q4 (17% excluding Capital Foods), led by brands such as Tata Sampann and Tata Soulfull.
• Salt revenue increased 13%, with the value-added salt portfolio soaring 31%.
• Tata Sampann grew 30% in Q4 and 29% for the full year.
• Tata Soulfull posted 32% year-on-year growth.

International Business

The international segment also remained positive, growing 5% in Q4 and 7% for FY24, excluding Capital Foods and Organic India’s international contributions. The brand continued expanding its portfolio and distribution channels across markets.

Tata Starbucks

Tata Starbucks continued to scale. The company added 6 net new stores in Q4 and entered 6 new cities. For the full year, 58 new stores were added, bringing the total to 479 stores across 80 cities. Bengaluru reached a milestone with the launch of its 50th store and its first drive-thru location. Source: Financial Express

So, Why Did the Stock Fall?

Despite the strong Q4 performance, investors reacted with caution. Here are a few possible reasons:

1. Profit Booking: After a solid rally, some investors may have chosen to lock in gains. This often happens after earnings announcements, regardless of results.
   
2. Valuation Concerns: With the stock trading at high multiples, investors may reassess valuation levels following the results. Even strong growth may not be enough to justify premium pricing in uncertain market conditions.
   
3. Margin Sensitivities: Although the company reported an EBIT of ₹620.8 crore, some investors may have expected stronger margin expansion. Margin pressure or even the absence of aggressive guidance can weigh on stock sentiment.
   
4. Expectations vs. Reality: Beating estimates is great, but the market often moves based on expectations of future performance. If forward-looking commentary or guidance doesn’t inspire confidence, stocks can slip—even on a strong quarter.
   
5. Sector-Wide Sentiment: The broader FMCG sector’s sentiment and market volatility can also drag down individual stocks, despite their good performance.
   

What the Management Said

Sunil D’Souza, Managing Director & CEO of Tata Consumer Products, said the company closed the year on a strong note and remains focused on building growth momentum. “We delivered a topline growth of 17% during the quarter, bringing FY25 growth to 16%,” he said. He emphasized that growth was broad-based across India and international markets.

He highlighted consistent gains in India’s tea and salt categories and credited innovation and channel expansion—particularly into Food Services and Pharma—as key enablers of recent growth. “Despite a tough operating environment, we delivered strong growth across businesses, and we will continue to drive consistent profitable growth,” he said.

The company also reported the rollout of its next-generation Go-to-Market platform, as well as strong growth in e-commerce and Modern Trade channels. It launched 41 new products during the year, with innovation contributing 5.2% to total sales. Source: Financial Express

Wrapping Up

Tata Consumer Products reported a quarter marked by notable profit growth, increased revenue, and continued expansion across its brand portfolio. However, the 4.5% decline in early trade indicates that short-term market movements do not always reflect reported financial performance. Shifts in investor sentiment, valuations, and expectations can influence stock prices, even in the face of strong earnings. While the current market reaction is evident, the reported financials highlight ongoing developments across the company’s business segments.

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