Motilal Oswal's research report on Tata Consumer Products
TATACONS has made significant progress on key strategic initiatives laid out to build a focused consumer products company. Strengthening and accelerating the core business: In FY22, TATACONS expanded into new target markets, launched regional focused packs, unveiled impactful campaigns across multiple platforms, and drove premiumization. It met its direct reach commitment of 1.3m outlets in India by the end of Mar'22. It gained ~100bp/400bp market share in core categories such as Tea/Salt. Drive digital and innovation: TATACONS's innovation efforts are focused on understanding and pre-empting evolving consumer trends and coming up with high-quality and differentiated products to delight these increasingly discerning consumers. The contribution of innovation to turnover has increased by 2x YoY in FY22. The e-commerce channel performed well, with its share of revenue increasing to 7.3% in FY22 v/s 5.2%/2.5% in FY21/FY20. The management is focused on driving growth in this channel and strengthening its digital market presence. Unlocking synergies: In FY22, significant steps were taken to improve efficiencies such as the integration of Tata Soulfull and Tata SmartFoodz, merger of Tata Coffee with TATACONS (refer report), and the simplification of the international business. This will yield operational efficiencies in management, legal, and administrative costs, and assist in creating a single listed entity in capturing the full value of the group. Exploring new opportunities: In FY22, TATACONS entered the Ready-to-Eat (RTE) category with Tata Q, expanded into new markets with Tata Sampann, accelerated the growth momentum for NourishCo, multiplied the reach of Tata Soulfull, and forayed into the energy drinks market in the UK with Good Earth.
We expect a revenue/EBITDA/PAT CAGR of 11%/19%/29% over FY22-24 and arrive at an FY24E SoTP-based TP of INR900/share. We maintain our Buy rating.
At 14:04 hrs TATA Consumer Products was quoting at Rs 735.80, up Rs 7.30, or 1.00 percent.
It has touched an intraday high of Rs 737.70 and an intraday low of Rs 724.50.
It was trading with volumes of 33,859 shares, compared to its thirty day average of 63,249 shares, a decrease of -46.47 percent.
In the previous trading session, the share closed up 1.43 percent or Rs 10.30 at Rs 728.50.
The share touched its 52-week high Rs 889.00 and 52-week low Rs 650.75 on 07 September, 2021 and 07 March, 2022, respectively.
Currently, it is trading 17.23 percent below its 52-week high and 13.07 percent above its 52-week low.
Market capitalisation stands at Rs 67,807.78 crore.
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