Coalindia vs TATA CONSUMER PRODUCTS Q3 FY24

Coal India reported a strong Q3 FY24 with highest-ever nine-month revenue of INR 104,914 crore (+5% YoY) and PAT of INR 23,849 crore. Production grew 11% YoY to 531.9 MT, driven by robust demand from power plants and improved logistics. Management maintained FY24 production guidance of 780 MT (likely ~770 MT due to SCCL lag) and set FY25 target at 838 MT. E-auction premiums moderated to 36-48% in Jan-Feb from Q3's 116% due to higher domestic availability. CAPEX guidance for FY25 is INR 17,500 crore, funded largely through internal accruals. Key risks include potential further decline in e-auction premiums and execution challenges in SCCL's ramp-up.

Guidance read

FY24 production target of ~780 MT: Management expects to achieve ~770 MT production for FY24, slightly below the original 780 MT target due to SCCL lag, but with efforts to minimize the gap. FY25 production target of 838 MT: Ministry has set a production target of 838 MT for FY25, down from initial 850 MT due to high coal stocks, with a review in April. CAPEX of INR 17,500 crore for FY25: CAPEX target for FY25 is INR 17,500 crore, including coal mining expansion, solar projects, and diversification initiatives. E-auction volume to be at least 15% of production: Management aims to maintain e-auction volumes at 15% or more of production, with potential to increase up to 20% if demand permits.

Risk read

Key risks include Declining e-auction premiums — E-auction premiums have fallen sharply from 116% in Q3 to 36-48% in Jan-Feb, which could pressure realizations if the trend continues.; SCCL production shortfall — SCCL is lagging its target by 8-9 MT due to land issues and EC clearances, posing a risk to overall production targets.; Accounting policy change impact on tax — Change in shipping activity adjustment accounting may lead to tax implications, though management expects limited net impact.; Receivables buildup — Trade receivables increased from INR 13,000 crore to INR 17,000 crore, driven by delayed payments from power utilities, which could strain cash flows..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.

Tata Consumer Products delivered a strong Q3 FY24 with consolidated revenue growth of 9% and EBITDA expansion of 190 bps. India beverages saw tea volume growth of 2% (fourth consecutive quarter of positive volume), while India foods grew 5% volume and 13% revenue. Growth businesses (Sampann, NourishCo, Soulfull, Yumside) surged 42%, now contributing 17% of India business. International business recorded 11% revenue growth with EBIT up 23%. The company closed the Capital Foods acquisition and expects to close Organic India within 45-60 days, targeting integration within 100 days. Management guided for NourishCo to reach INR 900-1,000 crore for FY24 and aims to grow the contribution of growth businesses to 30% with 30% growth post-acquisitions. Risks include U.S. coffee category softness and volatility in coffee prices, which could pressure international margins.

Guidance read

NourishCo to achieve INR 900-1,000 crore revenue in FY24: Management remains confident of delivering INR 900-1,000 crore for NourishCo in FY24, despite Q3 being seasonally weak. Growth businesses contribution to reach 30% growing at 30%: With the addition of Capital Foods and Organic India, management targets growth businesses to contribute 30% of India business, growing at 30%. Integration of Capital Foods and Organic India within 100 days: Capital Foods front-end integration substantially complete; Organic India expected to close in 45-60 days, with full integration within 100 days. International margins to be accretive to India business: Management expects international business margins to improve and become accretive to overall margins, with U.S. showing progress in 6-12 months.

Risk read

Key risks include U.S. coffee category softness and price volatility — The U.S. coffee category is under demand pressure, and coffee prices remain volatile, impacting the branded coffee business.; Portfolio complexity from multiple brands — Analyst raised concern about overlapping brands (e.g., Sonnets vs Sampann, Himalayan vs Sonnets honey) potentially causing confusion and bandwidth drag.; Integration risks from recent acquisitions — While integration is progressing, there could be hiccups in distributor transition and inventory cleanup for Capital Foods and Organic India..

Promise ledger

Of 2 tracked promises, management 0 met, 0 close, 2 missed.