India’s Tata Consumer Products on Friday reported second-quarter earnings above estimates, as the salt and spice maker benefited from stronger demand for its packaged foods amid a rebound in rural demand.
The Tata group-owned company reported a nearly 8% rise in its consolidated net profit to Rs 3,640 crore ($43.3 million) for the three months ended September 30, beating analysts’ estimate of Rs 3,280. crore, according to data compiled by LSEG.
Rural demand has accelerated over the past three quarters, including the July-September period, outpacing urban growth, partly driven by higher public spending.
Tata Consumer, known for products like ‘Tetley’ tea, its eponymous salt brand and ‘Organic India’ herbal supplements, has been expanding its distribution network, including in small cities and towns, to capitalize on the growing demand.
This helped its Indian food business, which sells a range of packaged products including pulses and spices, post a 28% rise in quarterly revenue. Meanwhile, its international business rose 7%, offsetting weak demand for its drinks in India.
Total revenue from operations grew nearly 13% to Rs 42.14 billion.
To counter rising expenses putting pressure on companies that sell coffee and tea globally, Tata Consumer has raised prices for its tea in India, while increasing prices for its packaged salt.
Earlier this week, instant coffee maker Be protected India’s second-quarter profit fell as it had to contend with higher ingredient prices and weaker consumer demand.
Meanwhile, Marico expects second-quarter revenue to grow due to price increases, while Dabur expects its first quarterly revenue decline in four years, citing weak demand for its food and beverages.
Tata Consumer shares closed slightly higher on Friday, taking gains to 2% this year.
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