ICICI Securities research report on Tata Consumer Products
TCPL is in the process to create a simplified corporate structure which may allow it to unlock/sell some of its low-growth / low-profit subsidiaries. That is the key insight we have gained from TCPL’s restructuring plan. We also believe recurring earnings accretion of 5-10% is a high probability post the restructuring as (1) minority interest of Rs957mn (9.3% of pre-minority interest) will be almost nil, (2) there will be a reduction in admin and legal expenses, (3) likely some savings from release of excess management bandwidth and (4) there will be some tax savings and better utilisation of tax credits. Even after considering dilution (31.3mn additional shares i.e. 3.4% dilution), EPS may inch up by 5-10%. We also expect some revenue synergies especially in extraction business.
Outlook
We expect TCPL to announce further restructuring plans in FY23 considering it has 45 global subsidiaries and some associates/ joint ventures. We remain constructive. Maintain BUY with an unchanged SoTP-based target price of Rs925.
More Info
At 12:43 hrs TATA Consumer Products was quoting at Rs 765.10, up Rs 21.85, or 2.94 percent.
It has touched an intraday high of Rs 782.50 and an intraday low of Rs 749.85.
It was trading with volumes of 331,776 shares, compared to its thirty day average of 148,504 shares, an increase of 123.41 percent.
In the previous trading session, the share closed up 0.32 percent or Rs 2.35 at Rs 743.25.
The share touched its 52-week high Rs 889.00 and 52-week low Rs 614.25 on 07 September, 2021 and 07 May, 2021, respectively.
Currently, it is trading 13.94 percent below its 52-week high and 24.56 percent above its 52-week low.
Market capitalisation stands at Rs 70,507.92 crore.
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