Tata Consumer Products Limited: Q2 FY26 – A Quarter of Robust Growth and Strategic Acceleration

Tata Consumer Products Limited has delivered a strong performance in the second quarter of Fiscal Year 2026, showcasing impressive growth across its key segments. The company reported a consolidated revenue of 4,966 crore, marking an 18% year-on-year increase. This growth was underpinned by a healthy 14% underlying volume growth in the India branded business. Consolidated EBITDA for the quarter stood at 675 crore, up 7% YoY, with an EBITDA margin of 13.6%. The company's Group Net Profit (before exceptional items) also saw a significant rise of 5% YoY, reaching 407 crore.

The core India business, encompassing both tea and salt, demonstrated consistent strength, achieving double-digit growth for the second consecutive quarter. This indicates sustained consumer demand and effective market strategies. The 'Growth' businesses, a strategic focus area for the company, showed significant sequential acceleration, growing by 27%. Tata Sampann, a key player in this segment, continued its strong momentum with a remarkable 40% growth. The Ready-to-Drink (RTD) segment also delivered robust performance, with a 31% volume growth and 25% value growth, despite facing headwinds from unseasonal rains and heightened competitive intensity. However, new acquisitions like Capital Foods, Organic India, and Tata Soulfull experienced a temporary impact due to the GST 2.0 transition at the end of the quarter.

International operations maintained their momentum, reporting a 9% constant-currency (CC) revenue growth, primarily driven by strong performance in the USA. The non-branded business also contributed positively, growing by 26% (CC). While profitability for the non-branded business remained healthy, margins corrected year-on-year. The company continued its strong pace of innovation, launching 25 new products during the quarter, reinforcing its commitment to market leadership and consumer relevance.

Strategic Initiatives and Market Dynamics

Tata Consumer Products is actively pursuing several strategic initiatives to drive future growth and enhance its market position. The company's 'Growth' businesses are expected to continue their strong trajectory, with management anticipating a 30% growth rate for this portfolio in the foreseeable near term. This confidence is rooted in the low penetration levels, significant distribution opportunities, and the large total addressable market for these categories. Key initiatives include expanding into new product lines such as Korean foods, with ramen and instant noodles already launched and more platforms planned. The dry fruits portfolio has achieved a 300 crore run rate, and the cold-pressed oil business is at a 250 crore run rate, demonstrating successful diversification.

In the international markets, the US business registered a 21% growth, with Eight O'clock coffee gaining market share. In Canada, Tetley maintained its market leadership, and the ethnic foods portfolio is gaining significant momentum. The company is also focusing on building the foodservice channel for Capital Foods and the pharma channel for Organic India, which are expected to be substantial growth drivers. These efforts highlight a clear strategy to move beyond traditional tea and salt categories and establish a stronger presence in the broader food and beverage space.

Margin Management and Future Outlook

While the company celebrated strong top-line growth, margin management remained a key focus. Consolidated EBITDA margins expanded by 70 basis points sequentially, reaching 13.6%. The India business EBITDA grew by 33% YoY, with a margin expansion of 180 bps, indicating effective cost management and favorable input costs. However, international EBITDA declined by 17% (CC) due to lower gross margins, primarily influenced by coffee price volatility and tariffs. The non-branded business also saw a margin contraction of 1,100 bps, mainly due to the reversal of fair value benefits.

Management has provided a positive outlook on future margin recovery, particularly for international coffee, expecting normalization within 1 to 1.5 quarters, supported by planned price increases. The India foods business is projected to achieve an EBITDA margin of 17-20% by Q4 FY26. Overall, the company anticipates a year-on-year expansion of consolidated margins in the coming quarters, aiming for an EBITDA of approximately 15% by Q4 FY26. This reflects a disciplined approach to balancing growth with profitability, ensuring sustainable value creation for shareholders.

In conclusion, Tata Consumer Products Limited's Q2 FY26 performance underscores its strategic clarity and disciplined execution. The company's focus on accelerating 'Growth' businesses, expanding its portfolio, and strengthening its distribution network positions it well for sustained growth. Despite external challenges like commodity price volatility and regulatory changes, the management's proactive measures and commitment to innovation demonstrate a clear path towards achieving its long-term objectives and reinforcing investor confidence.