Sharekhan's research report on Tata Consumer Products
Tata Consumer Products Limited (TCPL) registered good performance for Q3FY2023, with revenue growing by 8% y-o-y to Rs. 3,475 crore with flat operating profit and adjusted PAT growing by 2.2% y-o-y to Rs. 306.3 crore. Indian food business and Tata Coffee business registered 29% and 28% y-o-y growth, respectively. Focus on delivering high single-digit growth in India beverage and salt business (mid-single digit volume growth); mid single-digit growth in the international business, and high double-digit growth in growth businesses would drive consistent mid-teens revenue growth. Price hikes undertaken to improve international business’s margins. This along with structural cost-saving initiatives and better mix would help the company to post better margins going ahead.
Outlook
The stock currently trades at 47x/40x its FY2024E/FY2025E earnings. We maintain Buy with a revised PT of Rs. 870. Any large inorganic deal focusing on enhancing shareholders’ value will be a key trigger for valuations to improve in the near term.
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