Buy Tata Consumer Products; target of Rs 1360: ICICI Securities

ICICI Securities research report on Tata Consumer Products

TCPL’s Q4FY24 was in line with our estimates. We reckon, stock trigger in FY25-26 is likely outperformance of growth businesses (which are gross margin accretive too). Post-acquisition of Capital Foods and Organic India, salience of growth businesses is ~30% of India branded sales. It needs to execute the basics - derive synergies, distribution expansion, increase in through-put per store etc. Starbucks plans to reach 1,000 outlets FY28 (421 currently). We believe TCPL has all ingredients (resources, bandwidth, innovation pipeline, etc.) to achieve these targets. Maintain BUY.

Outlook

We model TCPL to report revenue and PAT CAGRs of 16% and 18.5%, respectively over FY24-26E led by improvement in profitability of India Foods and revival in profitability of international business. We maintain BUY and value the stock on DCF (unchanged TP of INR 1,360).