(Reuters) – India’s Tata Consumer Products reported second-quarter profit above estimates on Friday, as the salt-to-spices maker benefited from higher demand for its packaged food amid a pickup in rural demand.
The Tata group-owned company reported a near-8% jump in consolidated net profit to 3.64 billion rupees ($43.3 million) for the three months ended Sept. 30, outpacing analysts’ estimate of 3.28 billion rupees, per data compiled by LSEG.
Rural demand has gathered pace over the last three quarters, including the July-September period, overtaking urban growth, partly driven by increased government spending.
Tata Consumer, known for products such as ‘Tetley’ tea, its namesake brand of salt and ‘Organic India’ herbal supplements, has been expanding its distribution network, including in small towns and villages, to capitalize on the growing demand.
This helped its Indian food business, which sells a variety of packaged products including pulses and spices, post a 28% jump in quarterly revenue. Its international business, meanwhile, rose 7%, countering weak demand for its beverages in India.
Overall revenue from operations grew nearly 13% to 42.14 billion rupees.
To counter growing expenses squeezing companies selling coffee and tea globally, Tata Consumer has increased the prices of its tea in India, while also jacking up the prices of its packaged salt.
Earlier this week, instant coffee maker Nestle India’s second-quarter profit fell, as it grappled with higher ingredient prices and softer consumer demand.
Meanwhile, Marico expects second-quarter revenue to grow owing to price hikes, while Dabur expects its first quarterly revenue decline in four years, citing weak demand for its foods and beverages.
Tata Consumer’s shares closed marginally higher on Friday, taking gains to 2% this year.
($1 = 84.0280 Indian rupees)
(Reporting by Ashna Teresa Britto and Praveen Paramasivam; Editing by Sonia Cheema)
