Buy Tata Consumer Products; target of Rs 880: Motilal Oswal

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Motilal Oswal's research report on Tata Consumer Products

Tata Consumer Products (TATACONS)’s Standalone operating performance was strong led by EBIT margin expansion of ~190bp YoY (mainly due to gross margin expansion of ~210bp YoY) in 2QFY23. The strong Standalone performance offset the contraction in International business margins (EBIT margin contracted ~690bp) led by input cost inflation, currency weakness and lag in pricing. This resulted in muted Consolidated business performance, with EBIT margin contracting ~60bp YoY to 10.7% in 2QFY23. The company is on a portfolio expansion spree in its F&B segment, with product launches in new and innovative categories such as recent launch of Tata Sampann Hing and its foray into Protein-based product categories with the launch of a plant-based protein supplement Tata GoFit.

Outlook

Factoring in an in-line performance in 2QFY23, we maintain our FY23 and FY24 earnings estimates. We maintain our BUY rating on the stock with an SoTP-based TP of INR880.

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Tata Consumer Products - 221022 - moti