Grasim vs TATA CONSUMER PRODUCTS Q1 FY25

Grasim's Q1 FY25 consolidated revenue stood at INR 33,861 crore and EBITDA at INR 4,076 crore. The VSF business achieved record quarterly volumes of 212 KT, while chemicals saw improved ECU realizations of INR 32,529. The paints business (Birla Opus) commenced commercial production at three plants, with over 80% of planned products in distribution and 102 depots operational. The B2B e-commerce platform Birla Pivot reached a quarterly run rate of over INR 550 crore. Management maintained a cautiously optimistic outlook, with VSF demand supported by fiber substitution and chemicals benefiting from stable caustic prices. However, chlorine remains under pressure due to competitor capacity additions. Key risks include sustained losses from new businesses and potential demand slowdown in key markets.

Guidance read

Paints: High single-digit market share by FY25 end: Management reiterated target of achieving high single-digit market share by end of FY25. Paints: 50,000 active dealers by FY25 end: Target to have 50,000 active dealers by end of FY25, currently on track. Renewables: Double capacity to 2 GW by FY25 end: Renewable energy capacity to double from 1 GW to 2 GW by end of FY25. B2B e-commerce: $1 billion revenue in three years: Birla Pivot aims to reach $1 billion in revenue within three years.

Risk read

Key risks include Paints business losses may persist — Paints business is in investment mode with significant marketing spend; losses expected to continue for at least three years.; Chlorine oversupply from competitor capacity — Competitor added significant chlorine capacity in Gujarat, putting downward pressure on chlorine prices and ECU.; Paints revenue understated due to CWIP accounting — Revenue from trial production is capitalized to CWIP, making reported revenue not fully representative of actual sales.; Global demand slowdown and geopolitical risks — Elevated geopolitical risks and high interest rates could impact global textile demand and chemical prices..

Promise ledger

Scorecard data is being built as historical quarters are processed.

Tata Consumer Products reported a mixed Q1 FY25. Consolidated revenue grew 16% to INR 4,352 crore, with organic growth of 10% and acquisitions adding 6%. EBITDA rose 23% to INR 671 crore, with margin expansion of 80 bps to 15.4%. India Beverages grew only 6% (1% organic) as intense summer hurt hot tea and out-of-home NourishCo volumes. India Foods continued strong momentum with 30% revenue growth (14% organic, 10% volume). International business grew 10% (8% constant currency) with EBIT up 46%. PAT fell 14% to INR 289 crore due to higher amortization (INR 55 crore) and interest costs from bridge financing. Management highlighted integration of Capital Foods and Organic India is on track, with combined gross margins of 48.4%. Growth businesses (including acquisitions) now form 29% of India portfolio. Key risk: sustained high tea and coffee prices could pressure margins if not passed through.

Guidance read

Growth businesses to reach 30% of India portfolio: Management reiterated commitment to grow the growth businesses (including acquisitions) from 20% to 30% of the India portfolio, with these businesses growing at 30% CAGR. Organic India integration to complete in 100 days: Management committed to completing the integration of Organic India within 100 days from the April 16 closure, and is on track. Capital Foods integration largely complete: Integration of Capital Foods, including channel inventory cleanup, is complete and run rate is trending as expected. Rights issue to repay bridge debt: The rights issue, expected to close on August 19, will be used to repay short-term bridge financing of INR 3,000 crore raised for acquisitions.

Risk read

Key risks include Sustained high tea and coffee prices — North Indian tea prices are up 15-20% and coffee prices (Robusta) up ~50% from two quarters ago, which could pressure margins if not passed through.; NourishCo underperformance due to heatwave and tactical missteps — NourishCo revenue grew only 7% due to intense summer impacting out-of-home consumption and delayed tactical pricing actions, raising concerns about the business's resilience.; Integration disruptions at Organic India — Organic India deal closed on April 16, and inventory consolidation took longer than expected, potentially impacting near-term revenue and margins.; Amortization and interest costs weighing on PAT — Quarterly amortization of INR 55 crore from acquisitions and higher interest costs from bridge financing are depressing reported PAT, with no near-term relief expected..

Promise ledger

Of 3 tracked promises, management 0 met, 0 close, 3 missed.