Tata Coffee – An unique undervalued investment

Q4FY23 – concall highlights

• The standalone quarterly performance revenue operations were up 13% YoY to Rs257 which is primarily higher due to the higher revenues from Instant Coffee and the plantation operations, largely driven by product mix and higher price realization.
• PAT was up by 16.33% YoY due to implementation of our twin marketing strategies that is differentiation and disintermediation have largely supported these performances.
• Company recorded green coffee sales and excellent Instant Coffee sale performance from all three plants.
• On the consolidated results, the revenue from operations stood at Rs723 crores, up by 10% YoY due to higher realizations across all businesses and primarily around by the product mixing and largely driven by our Instant Coffee performance from all out factories.
• The operating performance of brand – Eight O’clock was impacted by low volumes, higher coffee prices and slightly higher input costs.
• Arabica prices have softened due to increased availability. On the other hand, Robusta prices have remained firm and if not a little bullish on account of reduced availability globally and especially from India.
• The company had one-time profit on sale in the Q2FY23, which was supported and which is also adding the overall numbers.
• Vietnam capacity at peak utilisation and order book remains healthy for further quarters as well.
• Instant coffee industry is expected to grow by 3% and company being present in 3 verticals i.e spray, agglo and freeze. Freeze is having a strong demand. In terms of geographies, Africa was witnessing some slowness due to inflation and higher coffee cost.4-5% YoY higher volume growth in FY23
• Robust prices are at $2400/tonne – 11 year high due to shortage of crops.
• For Eight O’Clock , company is focusing on a lot of innovation and kind of new product developments.
• On capex front, company is doing it on the Starbucks Roastery in Kushalnagar, which will come into stream next couple of months. And also, capacity debottlenecking in the instant coffee plants.