Tata Consumer's new businesses grow 40%, tea stalls

Tata Consumer Products Limited (TATACONSUM) reported Q2 FY27 revenue of ₹5,661 crore, up 14% year-on-year. Net profit increased 16% to ₹470 crore. But the most interesting number in this result is not revenue growth. It is where that growth is coming from. The company's growth businesses expanded 40% and now account for 38% of its India business. Consider the individual categories. Tata Sampann revenue grew 57%, while its ready-to-drink business grew 47%. Salt revenue increased 15%. These are meaningful growth rates for a company historically associated with tea and coffee. Now look at the other side. India tea volumes remained flat amid subdued category demand. International business revenue grew 7% in reported terms, but declined 2% in constant currency. This creates an important distinction. Tata Consumer is growing, but its traditional and international businesses are not contributing equally to that growth. There is encouraging evidence that the strategy is working. Consolidated EBITDA increased 18% to ₹794 crore, faster than revenue growth of 14%. This suggests operating profitability improved during the quarter. However, I would not assume that newer businesses will automatically deliver better margins. Distribution expansion, advertising, product launches and competition can all consume profits as these categories scale. My view: The portfolio shift is becoming visible in the numbers. The next challenge is proving that these businesses can grow profitably, not simply grow quickly. In the next quarter, I would track growth-business revenue, tea volumes and EBITDA margin. I would also watch whether newer categories continue gaining share without requiring disproportionate spending. My stance: The business mix is improving, but sustained profit growth will matter more than impressive category-level revenue numbers.