Motilal Oswal's research report on Tata Consumer Products
The moderation in Tea prices led to an expansion in the standalone gross margin for TATACONS in the last five quarters. The average price of Jan’22 to Jun’22 declined by 11% YoY to INR147.6/kg. However, floods and extreme weather events impacted production in JunJul’22 and led to a surge in prices since Jul’22. Going forward, with an expected normalization in production, we expect Tea prices to remain stable or moderate from current levels, thereby improving its gross margin in FY23. In this note, we have analyzed Tea prices and production trends and its impact on TATACONS. Here are the key insights.
Outlook
We expect a sales/EBITDA/PAT CAGR of 11%/19%/31% over FY22-24. Factoring in an in line performance in 1QFY23, we maintain our FY23 and FY24 earnings estimate. We arrive at our SoTP-based TP of INR890 per share and maintain our Buy rating.
More Info
At 13:46 hrs TATA Consumer Products was quoting at Rs 805.25, up Rs 2.15, or 0.27 percent.
It has touched an intraday high of Rs 811.15 and an intraday low of Rs 798.35.
It was trading with volumes of 20,830 shares, compared to its thirty day average of 129,121 shares, a decrease of -83.87 percent.
In the previous trading session, the share closed up 1.29 percent or Rs 10.20 at Rs 803.10.
The share touched its 52-week high Rs 876.70 and 52-week low Rs 650.75 on 20 September, 2021 and 07 March, 2022, respectively.
Currently, it is trading 8.15 percent below its 52-week high and 23.74 percent above its 52-week low.
Market capitalisation stands at Rs 74,207.95 crore.
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