Maruti vs TATA CONSUMER PRODUCTS Q2 FY26

Maruti Suzuki reported Q2 FY26 net sales of INR 40,130 crore (+12.8% YoY) and net profit of INR 3,290 crore (+7.5% YoY). Domestic volumes declined 5.1% due to pre-GST cut deferrals, but exports surged 42.2% to 110,487 units. Festive retail sales doubled to 400,000 units (vs 211,000 last year), with small cars growing 30% in October. Management guided for 6% industry growth in H2 and expects to exceed the export target of 400,000 units. The company reiterated its aspiration of 50% market share and 10% EBIT margin, supported by eight new SUV launches by 2030-31. Key risk: sustainability of the small car recovery given deferred sales and festive euphoria.

Guidance read

Industry growth of 6% in H2 FY26: Management expects overall industry growth of about 6% year-on-year in the second half and beyond. Exports to exceed 400,000 units in FY26: Given H1 exports of over 200,000 units, management expects to exceed the full-year export guidance of 400,000 units. Eight new SUV launches by 2030-31: Global President announced eight more SUVs to be launched in India by the turn of the decade, excluding Victoris and eVITARA. Aspiration of 10% EBIT margin and 50% market share: Management reiterated the goal of achieving 10% EBIT margin and 50% market share, as set by Suzuki Motor Corporation.

Risk read

Key risks include Sustainability of small car recovery — The strong festive retail sales may include deferred purchases and festive euphoria; sustainability is uncertain.; Margin pressure from discounting and mix — Higher sales promotion expenses (75 bps) and price corrections (20 bps) impacted margins; small car recovery could pressure blended margins.; Forex and commodity headwinds — Forex (JPY) and commodities (PGM) together adversely impacted margins by 30 bps; hedging gains are non-operating.; Market share recovery challenges — Global President noted that reaching 50% market share is more difficult than ever, despite product launches..

Promise ledger

Of 1 tracked promise, management 0 met, 0 close, 1 missed.

Tata Consumer delivered a strong Q2 FY26 with consolidated revenue growth of 18% to ~INR 5,000 crore, driven by 14% underlying volume growth in India branded business. India tea and salt posted double-digit growth for the second consecutive quarter, while growth businesses (30% of portfolio) grew 27%, led by Sampann (+40%) and RTD (+31% volume). EBITDA margin expanded 80 bps sequentially to 13.6%, aided by tea margin normalization. International revenue grew 9%, but U.S. coffee margins remain under pressure from volatile coffee prices and tariff uncertainty. Management expects consolidated EBITDA margins to reach ~15% by Q4, contingent on coffee cost stabilization. Key risk: further escalation in coffee prices or tariffs could delay margin recovery in the U.S. branded coffee business.

Guidance read

Consolidated EBITDA margin target of ~15% by Q4 FY26: Management expects to reach ~15% EBITDA margin by Q4, implying 130-160 bps expansion from current 13.6%, barring coffee cost headwinds. India tea gross margin to remain in 34%-36% range: Tea gross margins will be maintained at 34%-36% to balance profitability and market share; pricing adjustments will be made as needed. Growth businesses to continue 30% growth trajectory: The 30% of portfolio growing at 30% is expected to sustain in the near term, driven by low penetration and distribution expansion. U.S. coffee price increases in January and possibly March 2026: Price increases announced for January 2026; a second round may be needed in March to normalize margins, subject to coffee cost and tariff evolution.

Risk read

Key risks include U.S. coffee margin pressure from volatile coffee prices and tariffs — Coffee prices remain volatile due to Brazil tariffs; management uncertain on timing of margin normalization, with at least one more quarter of pressure expected.; Distributor discontent over full portfolio mandate — News reports of distributor protests; management acknowledges discontent due to requirement to distribute entire portfolio, but denies abnormal inventory build-up.; GST disruption impact on Q2 growth and potential Q3 restocking — GST rate changes caused inventory destocking in late September; management unable to quantify how much demand was postponed vs. lost, creating near-term uncertainty.; Tea market share decline in Nielsen data — Nielsen reported 80 bps tea market share dip; management attributes it to under-representation of modern trade and e-commerce (37% of sales), but general trade share may still be declining..

Promise ledger

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