Buy Tata Consumer Products; target of Rs 522: Sharekhan

Sharekhan's research repor on Tata Consumer Products

Tata Consumer Products Limited (TCPL, earlier Tata Global Beverages) clocked strong performance yet again in Q1FY2021; revenues and adjusted PAT grew by 13% and 72%, respectively (on a comparable basis). The India beverages (including NourishCo), India foods and international beverages (excluding food services) businesses grew by 11%, 19% and 23%, respectively, in Q1FY2021. Better revenue mix and efficiencies led to a 312 bps improvement in OPM. Expanding product portfolio with new products in the foods business, rise in consumption of branded tea in India, higher growth in the Vietnam coffee business, instant coffee business and the US coffee business are some of the key revenue drivers in the long run. New leadership is focusing on delivering consistent profitable growth and improving return ratios in the medium term.

Outlook

We stick to our Buy recommendation with a revised PT of Rs. 522.

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