Buy Tata Consumer Products; target of Rs 925: Sharekhan

Sharekhan's research report on Tata Consumer Products

Tata Consumer Products Limited (TCPL) delivered price-led revenue growth of ~11% y-o-y as volumes remained muted across categories and regions. OPM declined by 73 bps y-o-y to 12.9% owing to higher input prices, adjusted PAT declined by 5% y-o-y to Rs. 264 crore. OPM would improve in the next 2-3 quarters aided by stable raw tea prices, price hikes in domestic salt and international tea businesses and a favourable revenue mix. The company has maintained its thrust on product launches in key markets, distribution expansion in rural/semi-urban markets and market share gains in core categories to drive consistent volume growth in the coming years.

Outlook

The stock trades at 59.5x and 48.0x its FY2023E and FY2024E earnings, respectively. We maintain a Buy with a revised PT of Rs. 925.