Tata Consumer Products Limited Q3 FY26 Earnings Call Summary

Summary

Tata Consumer Products Limited - Q3 FY 2026 Earnings Call Summary Tuesday, January 27, 2026, 6:00 PM IST

Event Participants

Executives 4 Ajit Krishnakumar (COO), Ashish Goenka (Group CFO), Nidhi Verma (Head IR), Sunil D’Souza (MD & CEO)

Analysts 6 Abneesh Roy (Nuvama), Anurag Dayal (Phillip Capital), Mihir Shah (Nomura), Percy Panthaki (IIFL Securities), Rohit (White Oak), Sheela Rathi (Morgan Stanley), Tejash Shah (Avendus Spark)

Financials & KPIs

*Approximate values derived from management commentary.

Geographic & Segment Commentary

• India Beverages: Revenue grew 7% to ~₹1,600 crores. Tea volume grew 3%, underperforming the 9% YTD average as prices were passed back to consumers; however, gross margins expanded significantly as raw tea costs normalized.
• India Foods: Strong 19% revenue growth led by a 15% volume jump in Salt and 45% volume-led growth in Sampann. Salt achieved a 40 bps market share gain through targeted trade promotions and A&P spend in specific geographies.
• International: Revenue up 18%. The US business led with 31% growth in coffee, where coffee bags outpaced K-Cups by 4x growth. UK revenue was flat but delivery on profitability remained strong; Canada saw sluggishness due to aggressive tea price hikes.
• Growth Businesses: Crossed the ₹1,000 crore quarterly revenue milestone. Tata Sampann (Pulses/Poha/Dry Fruits) grew 45%, while Ready-To-Drink (RTD) grew 26%, now reaching a ₹200 crore quarterly net revenue run-rate.

Company-Specific & Strategic Commentary

• Go-To-Market (GTM) Split: Implemented a segmented distributor model separating “Salt-heavy” from “Growth-heavy” geographies to ensure dedicated focus; 82% of national rollout is complete with 100% target by early Feb 2026.
• Innovation Pipeline: Launched 15 new products in Q3 (55 YTD) including Matcha, RTD Green Tea, and specialty Soy sauces; innovation-to-sales ratio stands at 4.8% against a 5.0% target.
• Quick Commerce Adoption: E-commerce and Quick Commerce now account for 18.5% of sales, with Quick Commerce specifically growing 100% YoY and holding a ~15% share of total revenue.
• Tata Starbucks: Second successive quarter of 3% same-store sales growth (SSSG) with traffic stabilizing; footprint expanded to 504 stores across 81 cities.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

GTM Strategy & Execution

• Question: What is the primary unlock for the GTM changes? (Sheela Rathi, Morgan Stanley)
• Answer: In markets like Kolkata, 91% of sales were Tea/Salt, leaving only 9% focus for growth brands. Splitting the routes ensures dedicated “Growth” sales teams and supervisors to capture under-indexed categories (Sunil D’Souza).

Tata Sampann Profitability

• Question: Is the Sampann brand EBITDA-positive given its rapid growth? (Percy Panthaki, IIFL Securities)
• Answer: We track “Margin After Advertising & Promotion” (MAPE). This is positive and improving. Pulses moved from -5% margins five years ago to double-digits today (Sunil D’Souza).

US Coffee Dynamics

• Question: When will international margins normalize? (Nidhi Verma reading for Analyst)
• Answer: We are about a quarter away. We took another round of price increases in the US in January 2026 to offset the lag in P&L translation of coffee cost spikes (Sunil D’Souza).

Ready-To-Drink (RTD) Strategy

• Question: How is the distribution reach for RTD ahead of summer? (Anurag Dayal, Phillip Capital)
• Answer: Reach is ~1 million outlets. We have built a “water stack” (₹10 Copper water to ₹100 Himalayan) and “coffee stack” (₹50 PET to ₹70 Cans) to be ready for February season pick-up (Sunil D’Souza).

Key Takeaway

Tata Consumer Products delivered a robust Q3 FY26, crossing the ₹5,000 crore quarterly revenue milestone with a 15% YoY growth. Performance was driven by a 15% volume surge in India branded products, particularly in the Salt (+14%) and Sampann (+45%) segments. The “Growth Businesses” (Sampann, Soulfull, RTD, Capital Foods) now constitute 30% of India’s revenue, hitting management’s long-term target ahead of schedule. Strategically, the company is finalizing a national GTM split to decouple core commodities from high-growth categories, aiming to fix the focus deficit in tea-heavy markets. While EBITDA margins expanded 120 bps to 14.2% on the back of lower tea costs, international margins remain temporarily suppressed by coffee inflation. Management expects a 14.5%-15% margin exit rate for the fiscal year as US price hikes fully flow through and scale benefits materialize. Significant watch points include commodity price volatility and the successful absorption of the new 2-tier distribution structure.