Sharekhan's research report on Tata Consumer Products
TCPL is focusing on strengthening its core business and expanding its addressable market to clock steady double-digit earnings growth in the medium to long run (revenues/PAT grew at CAGR of 13%/20% over FY20-23).. Growth businesses grew by 53% y-o-y in FY2023 with increase in contribution to 15% from 10% in FY2022; Innovation’s contribution to sales increased to 3.4% from 2.7% in FY2022 and overall reach rose to 3.8 million outlets. Net cash stood at Rs. 2,893 crore; return profile improved with RoE/RoCE (ex-goodwill) standing at 7.8% and 15.0%; dividend payout increased to 65.3% in FY2023. With a strong focus on achieving consistent earnings growth, simplifying business model, and enhancing shareholder value, TCPL remains one of our top picks in the FMCG space.
Outlook
We maintain a Buy on the stock with a revised PT of Rs. 1,010. It trades at 53.7x/45.1x its FY2024E/FY2025E EPS.
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