KR Choksey's research report on Tata Consumer Products
In Q2FY25 TATACONS’S India Foods, International, and non-branded segments showed healthy performance, while India Beverages faced a weaker quarter. Elevated tea prices prompted staggered price increases in the Indian tea business. Additionally, a price hike for Tata Salt was announced, effective from October 24, to address input cost inflation. The company is gaining momentum in its new ventures, Capital Foods and Organic India. We lower FY25E/FY26E EPS by 11.0%/1.2% due to weaker-than-expected topline growth in the current quarter, rising costs, and weak demand. The company's share price trades at 67.2x/49.3x FY25E/FY26E EPS.
Outlook
We assign a 55.0x P/E on FY26E EPS of INR 20.6, setting a target price of INR 1,136 (Previously: 1,310), implying an 11.7% upside. Given the positive long-term outlook and lower valuation versus peer Nestle, we maintained our 'ACCUMULATE' rating for Tata Consumer Products Ltd.
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