Tata Coffee – An unique undervalued investment

TATA Coffee Q1 FY24 Result Update:

• Merger of Tata Coffee and Tata Consumer is in the advanced stage and expected to be completed during the quarter.
• Company confident in improving the performance of Eight O’Clock Coffee and sees opportunities in the following quarter.
• Considering all options to support growth in Vietnam operations, including capacity expansion.
• Higher revenue generated from coffee plantations, higher realizations from instant coffee operations and better tea operations.
• The company’s operation in Vietnam was at peak capacity utilization. It witnessed higher sales for premium products and healthy order pipeline during the quarter.
• In coffee plantation business, the rainfall was deficient during the quarter which picked up in late July 2023.
• The tea plantations saw higher crops and better realizations during the quarter as compared to Q1 FY23.
• It envisages better demand for coffee from Africa in the coming periods. Instant coffee consumption continues to be on a secular path of growth despite the fact that there are several challenges in Europe where especially recessionary trends can be seen, but the instant coffee as a whole portfolio continues to grow.
• Revenue Mix: Plantation (Cultivation, Manufacture, and Sale of Coffee and Other Plantation Crops) – INR 143 Cr (20% of revenue). Value Added Products (Production and Sale of Roasted & Ground and Instant Coffee Products)- INR 5,80.1 Cr. (80% of revenue).