Buy Tata Consumer Products; target of Rs 1315: Sharekhan

Sharekhan's research report on Tata Consumer Products

Tata Consumer Product Ltd’s (TCPL’s) Q2FY2025 performance was broadly in line with expectations with revenues growing by ~13% y-o-y (organic growth at 5%) and OPM rising ~50 bps y-o-y to 14.9%. Higher interest cost led to a ~6% y-o-y decline in PAT. Going ahead, Tata Salt is expected to perform well, corrective pricing action will drive recovery in NourishCo, Capital Foods and Organic India to witness q-o-q improvement in sales and India tea will see price-led growth. Organic revenue growth to gradually improve in quarters ahead. Margins to be under pressure in the coming quarters due to raw material price inflation. However, management is confident of margin improvement in the medium term on back of improved mix and efficiencies.

Outlook

Stock trades at 66x/52x/41x its FY25E/FY26E/FY27E EPS, respectively. We maintain Buy with an unchanged PT of Rs. 1,315.

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